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Cost consultant Alinea has warned the UK economy could be in 鈥渁 bubble that will burst鈥� as it faces threats from global volatility and a potential 鈥楤rexit鈥�.

In its latest market report, shared exclusively with 好色先生TV, Alinea warns the UK is navigating 鈥渦nchartered waters鈥�.

The firm notes that while the country has so far been little affected by external markets and events, such as the collapse in oil price and China鈥檚 financial instability, the inflow of investment money has resulted in inflation of asset values creating a bubble that could burst if investment money dries up.

Despite these concerns, Alinea held its tender cost inflation forecasts at 5% for 2016 and 4% for 2017.

The consultancy expects a 鈥減urer鈥� form of tender cost inflation going forward, arguing much of the volatility of recent pricing is now in the system.

Current volatility has created a 鈥渇ragile and unpredictable鈥� global economy, which is seeing nervous investors move from a 鈥渂ull鈥� to 鈥渂ear鈥� market, Alinea reports.

For example Saudi Arabia is looking to slash its $98bn budget deficit after the International Monetary Fund warned it would run out of money in five years if oil prices do not rise.

The skills crisis also continues to hinder optimism as it creates 鈥減ockets of volatility鈥� in the UK, Alinea said, while in 2014 the top twenty contractors had a combined writedown of 拢200m giving rise to the view that the construction industry is in a 鈥渕ore precipitous鈥� situation than previously thought.

The UK is also yet to say if it will exit the European Union and London will vote for its new mayor, while the US will vote for a new president in 2016,all of which have a potential fall-out for the UK construction industry.