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News Archive - November 2009

Construction Spend Boosts the Whole Economy

EVERY £1 spent on construction leads to an increase in GDP of £2.84, according to new research commissioned by the UK Contractors Group (UKCG), in partnership with the CBI.

The report, Construction in the UK economy: The Benefits of Investment, by LEK Consulting, shows that construction is the best sector for stimulating employment as the spending not only creates construction output worth £1, but also promotes growth elsewhere in the economy worth £1.84

In some areas, such as building schools, the economic benefits of construction are even more pronounced. LEK estimates that every £1 spent in this area leads to a total economic benefit of between £3.87 and £5.04, partly because of the direct benefit to the economy, but also because of improved education services that lead to a long-term benefit via a higher-skilled workforce.

Supply Chain

The construction industry is a driver of growth in other sectors due to its heavy reliance on an extended and varied supply chain, the CBI believes. “To ensure that the construction industry can play its role in the UK’s economic recovery, we need to make sure that good procurement practices do not fall by the wayside during the recession,” says John McDonough, chairman of the CBI’s Construction Council. “We have already seen worrying signs of some clients using the recession as an excuse to seek the lowest possible tender prices. The government needs to lead the way, and work with the construction industry to ensure the focus remains on innovation, partnership and value for money.”

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