Строительство в экономике Великобритании - преимущества инвестиций

Construction in the UK economy – the benefits of investment

Introduction

Impact on economic activity

Contribution to employment

Benefits of investment

Conclusion

About UKCG and L.E.K. Consulting

Construction in the UK economy

Page

31UK Contractors Group.  Construction in the UK economy. 2

Introduction

This study has been commissioned by the UK Contractors Group and was conducted during August and

September, 2009

The objectives of this study are to demonstrate the impacts of the UK construction industry on the UK economy, and specifically to highlight the benefits of investing in construction

The key areas covered by the study include:

- the significant contribution that construction makes to the UK economy, both at a national level and in supporting the regions

- the key contribution that construction makes to UK employment

- the enabling role that construction plays in realising a range of broader economic and social objectives

Construction in the UK economyUK Contractors Group.  Construction in the UK economy. 3

The construction industry is vital to the overall UK economy, but is suffering

heavily in the recession

Construction* is a major contributor to UK GDP (directly c. 8.5% in 2008, rising to c.10% overall* when the entire value chain

is considered) and a driver of historical GDP growth

The construction industry value chain consists of c.300,000* firms, including many small- and medium-sized family and local

businesses

- the sector employs c.3 million* people in a multitude of roles representing 8% of UK employment

- a significant proportion of construction employees (>60%) are low-skilled labourers with relatively limited alternative

employment opportunities

Construction is also an important driver of growth for other sectors, without which there would be a loss of domestic

production capacity and skills

UK government investment has played an important role in growing the UK’s capital stock

- government investment in construction has historically focused on infrastructure, education, housing and health

- government has historically represented 30-40% of construction demand

Compared to its European counterparts, the UK has suffered from a more pronounced decline in construction activity since

the onset of the recession

- the impact on the construction sector is already apparent through sharp increases in company closures (an increase of

over 40% between Q4 2008 and Q1 2009) and individual bankruptcies and redundancies (an increase in bankruptcies

of c. 35% between Q4 2008 and Q1 2009 and a redundancy rate of 28 per 1,000 employees in Q1 2009 – the highest

amongst UK industries)

Note: * Construction here refers to the whole construction value chain defined as being the UK Standard Industrial Classification of Economic

Activities (SIC, 2003) codes 45 (construction) and 74.2 (architectural and engineering activities) and the construction products sector

Source: ONS; BERR; Annual Business Inquiry; Registry Trust; Insolvency Agency; Financial Times; L.E.K. analysis

Construction in the UK economyUK Contractors Group.  Construction in the UK economy. 4

The construction industry value chain consists of c.300,000 firms employing

over 3 million people in a multitude of roles

Professional

services*

Site preparation,

construction,

improvement and

repair

Construction

products

and

materials

Planning,

architecture and

design

Civil and structural

engineers, quantity

surveyors

Project planning and

management

New build and repair and

maintenance of both

residential and nonresidential buildings,

including specialist trades,

e.g., bricklaying, roofing,

scaffolding

Extensions, site

preparation, major

alternations and

enhancements

Civil engineering:

construction of roads,

railways, runways, bridges

and tunnels, harbours,

canals, drainage systems

Supply of basic

materials, e.g.,

aggregates and

cement

Supply of value

added building

materials and

building products,

e.g., bricks, blocks,

pavings

Note: * Architectural & engineering services and related technical consultancy; Professional services output is calculated as a ratio of

total turnover and assumes that architects and consultants contribute 80% of output in SIC code 74.2

Source: BERR; DTI; ONS; Construction Products Association (CPA); Annual Business Inquiry

Installations and

services

Installation of fixtures and

fittings, including gas

fittings, plumbing, heating

and ventilation plant,

sound and heat insulation,

electrical fixtures and

fittings

Painting and decorating,

glazing, plastering, tiling,

on site joinery and

carpentry, flooring,

plumbing, etc.

c.300,000 c.2,200,000 c.650,000

c.£21bn (2007) c.£124bn (2008) c.£50-55bn (2008)

c.30,000 c.230,000 c.30,000

Stage

Role in

value

chain

Employees

Firms

Output

Construction in the UK economyUK Contractors Group.  Construction in the UK economy. 5

The report is structured in three parts that, together, support the overall message

Impact on economic activity

- Construction is one of the best ways of stimulating economic activity – not just in the construction

sector, but across the economy as a whole, including troubled manufacturing sectors. It also has one of

the lowest levels of imports, so the stimulus spending stays within the national economy

Contribution to employment

- Construction is the best sector for stimulating employment. The employment that construction provides

benefits lower skilled and young workers who have relatively few alternative opportunities. Many

regions are heavily dependent on construction jobs

Benefits of investment

- Construction is not only immediate economic production, it is also investment rather than consumption,

which provides significant long-term economic and social benefits

1

2

3

Government investment in construction is the most beneficial use of stimulative public expenditure

in both the short and longer term, and any reduction in construction expenditure would have

significant immediate and enduring negative consequences for the UK

Construction in the UK economyUK Contractors Group.  Construction in the UK economy. 6

Construction is one of the best ways of stimulating economic activity

Impact on economic activity

Construction* is a major contributor to UK GDP (directly c. 8.5%* in 2008, £124 billion)

Construction has been a significant contributor to historical UK output growth

The construction industry is a driver of growth in other sectors due to its heavy reliance on an extended and varied

supply chain

£1 spent on construction output generates a total of £2.84 in total economic activity (i.e. GDP increase)

In addition to the economic benefits, every £1 invested in construction provides financial returns to the Treasury in tax

income and benefit savings

In the short term, construction is one of the most effective sectors in which the government could invest to stimulate

economic activity

Compared to other sectors, construction relies little on imports; hence, investment in construction is more likely than

other sectors to generate additional economic activity within the UK

Private construction output is very sensitive to changes in GDP; private activity has contracted sharply in the current

downturn, causing reductions in GDP and employment

Private sector construction spend is falling faster than in previous recessions; CVAs, receiverships and bankruptcies in

the construction sector have increased since the onset of the current recession

Construction has had the greatest increase in redundancy rate in the UK since the start of the current recession

Even if current government plans in construction are maintained, construction output is expected to fall significantly

over the next 2-3 years.  Any reduction in public expenditure would exacerbate this problem

1

Note: * Construction is defined here as SIC code 45 and excludes construction products and business services, e.g., architecture and surveyingUK Contractors Group.  Construction in the UK economy. 7

Construction is a major contributor to UK GDP (c. 8.5% in 2008, £124 billion)

Percent

90

80

70

60

50

40

30

20

10

100

0

Public works

Public housing R&M

Public non-housing R&M

New housing public

Public infrastructure

Private commercial

Private housing R&M

Private non-housing R&M

New housing private

Private infrastructure

Private industrial

Construction*

£124bn

GDP

£1,443bn

Note: * Construction is defined here as SIC code 45 and excludes construction products and business services, e.g., architecture and surveying;

** Construction output for GB only

Source: ONS

Construction’s* total output includes

c. £80 billion of direct value-add and

c. £44 billion of intermediate consumption

- intermediate consumption comprises

the total amount of materials and

services used in construction, including

sub-contracting services

UK government investment has historically

driven 30–40% of construction output

Construction contributes a net trade surplus

to the UK (£223m in 2008)

- little construction output is imported;

increased construction demand is

therefore more likely to directly benefit

domestic UK firms

- furthermore, construction supports

high-value net-export service sectors

such as engineering consultancy and

design, architectural activities, and

property management

Construction

UK GDP and construction output**

(2008)

8.5%

Private

Public

Impact on economic activityUK Contractors Group.  Construction in the UK economy. 8

Real change in UK GVA by sector

(1994-08)

Note: * GVA plus taxes minus subsidies is equivalent to GDP; ** Other business services includes non-financial professional services, e.g.,

marketing; *** Construction is defined as SIC code 45 and excludes construction products and business services, e.g., architecture and surveying

Source: ONS; L.E.K. analysis

900

1,300

1,250

1,200

1,150

1,100

1,050

1,000

950

Billions of 2007 pounds

0

Mining & quarrying inc. oil and gas

1994

2008

Government

Manufacturing

Other business services**

Real estate activities

Financial and insurance

Construction***

Wholesale and retail trade

Computer and related activities

Other services and equipment rental

Recreational, cultural and sporting

activities

Hotels and restaurants

Sales, maintenance & repair of

motor vehicles

Transport

Post and telecommunications

Electricity, gas, oil and water

supply

Agriculture, forestry and fishing

Construction contributed c.10% of total

UK GVA* growth between 1994 and

2007, and is an important driver of

growth in other sectors of the economy

Much of the growth in total UK GVA in

recent years can be attributed to

government, financial and real estate

sectors

The high growth in these other sectors is

unlikely to be sustainable

Furthermore, other traditional sectors of

the economy, e.g., manufacturing, have

been in decline

Construction has been a significant contributor to historical UK output growth

One of the highest

sustainable

contributors to our

long-term economic

growth

Impact on economic activityUK Contractors Group.  Construction in the UK economy. 9

The construction industry is a driver of growth in other sectors due to its heavy

reliance on an extended and varied supply chain

Consumption of output from other sectors by

construction in purchaser prices (2007)

The construction* industry uses a wide range of

inputs from many industries to produce its goods and

services

Investment in the construction industry therefore

indirectly supports a broad set of industries as the

increase in final demand filters through to key

industries which supply the sector

In particular, the following sectors are amongst those

that benefit most from increases in construction

activity:

- aggregates

- renting of machinery

- real estate

- architectural and technical consultancy

- plastic products

- wood products

- metal products

- mining and quarrying

Note: * Construction is defined as SIC code 45 and excludes construction products and business services, e.g., architecture and surveying

Source: ONS; L.E.K. analysis

10

20

30

40

100

90

70

60

50

0

2007

Percent

80

Other

Banking and finance

Structural clay products

Market research, management consultancy

Motor vehicle distribution, repair, fuel retail

Other business services

Other mining and quarrying

Structural metal products

Wood and wood products

Plastic products

Architectural activities and technical consultancy

Owning and dealing in real estate

Renting of machinery

Aggregates

£28.7bn

Impact on economic activityUK Contractors Group.  Construction in the UK economy. 10

Source: ONS (2002); L.E.K. analysis

Investment

in

construction

Direct

impact

Indirect

impact

Induced

impact

£1 £1 £1.09 £0.75

The type I output multiplier is a measure of the direct and indirect effects associated with an additional £1 spend on a particular sector. The type I

multiplier for construction in the UK was estimated by the ONS to be 2.09

Type II multipliers include the induced impacts associated with the increased economic activity and income in the economy. This has been

estimated by L.E.K. based on income tax and National Insurance rates, indirect taxes, savings ratios, and import share of disposable income

Indirect impact

Supply chain impacts of construction

and their knock on effects, i.e.,

increase in output and income up and

down the supply chain

Sectors that benefit from increased