Pressure mounts for more government construction spending as report shows it brings greatest rise in GDP

Construction generates a greater increase in GDP per £1 spent than almost any other sector, according to a report launched today. The news will increase pressure on government to continue spending on construction projects.

Every £1 of spending in the industry produces a £2.84 increase in GDP, according to research by economists LEK. This is greater than the vast majority of other industries, including agriculture and motor vehicles.

The research was commissioned by the UK Contractors Group and backed by the CBI, both of which will use the findings to push for the next government to commit to capital spending in construction to stimulate the industry and the wider economy.

The research, entitled Construction in the UK Economy, claims that construction is one of the most effective ways of boosting the economy in the short and long term.

It reveals that construction is responsible for almost £30bn of demand in other sectors each year, including machinery, aggregates and plastic, and also shows that the industry has been hit worse than any other sector by redundancies.

The report also emphasised the longer term benefits of investment in the industry. It calculated that a 44p investment in building a new school could generate £5.04 of extra economic output in the UK economy over 30 years, because of factors including improved educational attainment.

The figure was calculated partly by applying economic multipliers to data from schools delivery body Partnerships for Schools on educational improvement in new school buildings.