Pestle Analysis of Construction Industry

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PESTEL ANALYSIS

Political
* The public spending on infrastructure is expected to decrease in many developed countries. Major part of this spending will be directed to the civil infrastructure due to the increasing concerns about sustainability. Investments in power station replacements, wind farms, waste management assets and other green initiatives will increase (The Economist 2010; Balfour Beatty, 2012). * Since governments in the emerging countries, especially in India, China and Brazil implement market reforms, invest in infrastructure and build competitive environment Balfour Beatty actively invests in these regions (Bricdata 2012; Balfour Beatty, 2012). * The interest rates are very low in the USA and UK where it will be kept at 0.5% until 2015 (Barrow and Copper, 2012). This will enhance consumer investments in infrastructure since the banks do not offer attractive rates. Moreover low interest rates will enable the infrastructure companies to borrow more money for project investments. * Infrastructure UK unit built in HM Treasury in 2010 and actively discussed $109bn Transportation and Infrastructure Bill containing large infrastructure projects will aim to develop infrastructure industry in the UK and USA respectively (HM Treasury, 2012; Weisman, 2012) * Political issues in the Middle East increased commodity price volatility (Hotter, 2011). A growth in the commodity prices enhanced global mining activity which increased the investments in rail for commodities transportation, making both sectors attractive for investments (Balfour Beatty, 2012).

Economic
* The recent financial crisis slowed the market growth in major markets USA and UK. The infrastructure industry is capital-intensive and it suffered significantly from the crisis: both volume of construction works and investments decreased (Nistorescu and Ploscaru, 2010). The possible default of Greece is also dangerous for the UK since its total exposure to Greek debt is...
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