Spending on construction significantly benefits the UK economy, according to independent research by L.E.K. Consulting.

Commissioned by the construction industry body, UK Contractors Group (UKCG), in partnership with the CBI, the report, Construction in the UK economy: The Benefits of Investment, shows that construction is the best sector for stimulating employment.

It also shows that every £1 spent on construction leads to an increase in of £2.84, as the spending not only creates construction output worth £1, but also stimulates growth elsewhere in the economy worth £1.84.

In some areas, such as building schools, the economic benefits of construction are even more pronounced. L.E.K. Consulting 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.

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John Cridland, CBI Deputy-Director General, said: "With the Chancellor's Pre-Budget Report looming, the CBI is continuing to press the case for protecting capital spending by government.

"A strong economy needs fit-for-purpose schools and hospitals, and it will be the construction industry that builds the new transport and energy infrastructure needed to shift to a low-carbon economy.

"This timely report outlines the essential relationship between the construction sector and other parts of the economy, as well as its important contribution to numerous other social and economic objectives, including regional development and employment."

Other key findings of the report include:

• The construction industry is a driver of growth in other sectors due to its heavy reliance on an extended and varied supply chain
• Construction relies little on imports, so investment is more likely to generate additional economic activity within the UK
• Construction is not only immediate economic production. It is also investment rather than consumption, which provides significant long-term economic and social benefits to the country