Impact of the Government’s Spending Review on the Construction Industry

Impact of the politicss Spending Review on the spin IndustryThe invasion of the Governments Review on the construction industry has had distinct reactions. Edwards (2010)7 points out that 20 bn of capital spending volition be solidus between now and 2014/15. The impact will be loathly on government departments and local authority budgets. But get on dilate published by the HM Treasury (2010)3 indicate that the government intends to plus net capital spending by 2.3 bn up to 2014/15, relative to the June 2010 cipher predictions. Currently the Government spends approximately 50 bn on capital projects.It appears that the Government is focussing on those projects with the highest economic value. Education along with wellness and infrastructure are areas that the government has chosen to focus on (Anon, 2010)8. This obligate also quotes Graham Watts, Chief Executive of Construction Industry Council who states that tender housing is the worry, but investment in schools, carbon reduction and transferral infrastructure plus the Green Investment Bank are decreed. The Spending Review of 2010, has reduced the funding for Social Housing from 8.4 bn to 4.4 bn (HM Treasury, 2010)3 This will be a severe blow to those construction companies who specialised in having contracts with social housing customers, such as, local councils and housing associations, according to lighting (2010)9.Keynesian Theory and the UK Economy The UK economy has endured six consecutive accommodate of negative growth, resulting in one of the most prolonged recessions in forward-looking times (2008/09). Since the beginning of 2010 the economy has shown some positive signs of recovery.Two schools of purpose have emerged from this rece... ...ble to the Miller Group will therefore be further restricted. The Group does recognise this constraint and as a result the party continues to focus on cash generation and cost controls (Miller Group lag Report)13. The cost control fact ors according to Keynesian Theory will misbegotten the company is responding to its own difficulties and will start hoarding money to, worry the consumer and this will further impact the circular flow of money in the economy. SummaryThis paper has provided an overview of the UKs Spending Review of 2010 and its potential impact on the macroeconomic picture of the UK. Particular emphasis has been given to the relevancy of the Spending Review on the construction industry and its impact on a construction company. Furthermore the paper attempts to relate some aspects of the Keynesian Theory to the current UK economic situation.