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Public Expenditure - UK - August 2016

“The referendum decision to exit the EU will change the emphasis of the government, not least because the new chancellor and the prime minister have been somewhat critical of previous budget cuts and austerity. These policies are due to be scaled back in the autumn budget. There is unlikely to be a radical departure, though the chancellor will be mindful of the need to boost industry amid the uncertainty created by the exit decision.”
– Terry Leggett, Senior Analyst

This report answers the following key questions:

  • What is the likely impact of Brexit on public expenditure?
  • What are the main drivers of public spending?
  • Is capital spending in the public sector outstripping overall growth?

Political policy is inevitably the single most important factor influencing public expenditure. The two major parties that compete for government generally have different approaches. Labour tends to support public spending and is more prepared to borrow to that effect, while the Conservatives follow a stronger fiscal control policy. However, this is a major over-simplification, with the change of chancellor post-EU referendum expected to lead to policy changes, even though the Conservatives remains in government.

The fiscal policy of any government is ultimately determined by the country’s economic conditions. The difficulties that surrounded the financial crisis in 2008 led to a very tight fiscal policy by the Conservative-led government. The UK subsequently recovered, albeit slowly, and the economy was recently recording among the strongest growth in Europe. However, the decision to exit the EU has created a high level of uncertainty. Forecasters are suggesting anything from slowing growth to a recession in the short term. What is clear is that it has created economic uncertainty, which is likely to feature heavily in the autumn statement when the new chancellor announces his plans.

Social conditions also determine public expenditure policy. The UK population continues to grow, with strong changes in the make-up of that population. A particularly significant trend is the ageing of the population as the older elements of society grow in proportional terms to the total. This reflects historic birth rates, huge advances in healthcare allowing people to live longer, healthier lifestyles, and the comparative affluence of the population. The trend is expected to have a significant impact on pensions and healthcare, while the number of children being born will provide guidelines for further demand on the educational system.

There is effectively no public sector supply industry as no company offers the entire range of services and products used by the public sector. Many companies have significant interests in the public sector, but are typically defined by a separate industry definition that is then used for both public and private sector supply, such as facilities management, waste management, aerospace etc. Even with a relaxation of public spending cuts, there will continue to be an intensifying drive to efficiency across the public sector, with the new government looking to emphasise productivity in its policies.

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Table of contents

  1. Executive Summary

      • The market
        • Figure 1: Public expenditure as a % of GDP, 2006-15
        • Figure 2: Total DEL, 2012-16 actual, 2017 expected and 2018-20 planned
        • Figure 3: Total managed expenditure, 2012-16
        • Figure 4: Comparison of public current and capital expenditure, 2012-16
        • Figure 5: Segmentation of total managed public expenditure, by function, 2016
        • Figure 6: Segmentation of total managed current public expenditure, by function, 2016
        • Figure 7: Segmentation of total managed capital public expenditure, by function, 2016
      • Market factors
        • Companies
          • What we think
          • Key Insights

              • What is the likely impact of Brexit on public expenditure?
                • What are the main drivers of public spending?
                  • Is capital spending in the public sector outstripping overall growth?
                  • Introduction

                    • Definitions
                      • Methodology
                        • Abbreviations
                          • Market positioning and issues in the market
                          • UK Economy

                            • Overview
                              • Figure 8: UK GDP quarterly development, 2003-16
                              • Figure 9: UK GDP in economic downturns and recoveries since 1979
                            • Inflation
                              • Interest rates
                                • House prices
                                  • Figure 10: UK House price changes, 2006-2016
                                • Consumer spending
                                  • Manufacturing
                                    • Figure 11: UK manufacturing, 2014-16
                                  • Business investment
                                    • Figure 12: UK GFCF 2003-16
                                  • Imports
                                    • Exports
                                    • Market Factors

                                      • Key points
                                        • Market factors
                                          • Social
                                            • Figure 13: UK population projection, 2014-39
                                            • Figure 14: Composition of UK population projection, 2014-39
                                          • Economic
                                            • Political
                                            • Market Size

                                              • Key points
                                                • Market size
                                                  • Figure 15: Total managed expenditure, 2012-16
                                                  • Figure 16: Comparison of public current and capital expenditure, 2012-16
                                              • Market Segmentation

                                                • Key points
                                                  • Market segmentation
                                                    • Figure 17: Segmentation of total managed expenditure, by function, 2016
                                                    • Figure 18: Segmentation of total managed expenditure, by function, 2012-16
                                                  • Current expenditure
                                                    • Figure 19: Segmentation of current expenditure, by function, 2016
                                                    • Figure 20: Segmentation of current expenditure, by function, 2012-16
                                                  • Capital expenditure
                                                    • Figure 21: Segmentation of capital expenditure, by function, 2016
                                                    • Figure 22: Segmentation of capital expenditure, by function, 2012-16
                                                  • General public services
                                                    • Figure 23: Segmentation of total managed expenditure on general public services, by function, 2012-16
                                                  • Defence
                                                    • Figure 24: Segmentation of total managed expenditure on defence, by function, 2012-16
                                                  • Public order and safety
                                                    • Figure 25: Segmentation of total managed expenditure on public order and safety, by function, 2012-16
                                                  • Economic affairs
                                                    • Figure 26: Segmentation of total managed expenditure on economic services, by function, 2012-16
                                                    • Figure 27: Segmentation of total managed expenditure on transport, by function, 2012-16
                                                  • Environmental protection
                                                    • Figure 28: Segmentation of total managed expenditure on environmental protection, by function, 2012-16
                                                  • Housing and community amenities
                                                    • Figure 29: Segmentation of total managed expenditure on housing and community amenities, by function, 2012-16
                                                  • Health
                                                    • Figure 30: Segmentation of total managed expenditure on health, by function, 2012-16
                                                  • Recreation, culture and religion
                                                    • Figure 31: Segmentation of total managed expenditure on recreation, culture and religion, by function, 2012-16
                                                  • Education
                                                    • Figure 32: Segmentation of total managed expenditure on education, by function, 2012-16
                                                  • Social protection
                                                    • Figure 33: Segmentation of total managed expenditure on social protection, by function, 2012-16
                                                • Industry Structure

                                                  • Key points
                                                    • Industry introduction
                                                    • Amey

                                                          • Figure 34: Financial analysis of Amey UK, 2011-15
                                                          • Figure 35: Turnover analysis of Amey UK, by sector, 2015
                                                          • Figure 36: Turnover analysis of Amey UK, by region, 2015
                                                        • Company strategy
                                                        • Aspire Defence Holdings

                                                              • Figure 37: Financial analysis of Aspire Defence Holdings, 2009-13
                                                            • Company strategy
                                                            • BAE Systems

                                                                  • Figure 38: Financial Analysis of BAE Systems, 2011-2015
                                                                  • Figure 39: Turnover Analysis of BAE Systems by activity, 2015
                                                                • Company strategy
                                                                • Babcock International Group

                                                                      • Figure 40: Financial Analysis of Babcock International Group, 2012-2016
                                                                      • Figure 41: Turnover Analysis of Babcock International Group, 2016
                                                                    • Company strategy
                                                                    • Balfour Beatty

                                                                          • Figure 42: Financial analysis of Balfour Beatty, 2011-15
                                                                          • Figure 43: Investment portfolio of Balfour Beatty by segment, 2013-14
                                                                        • Company strategy
                                                                        • Capita

                                                                              • Figure 44: Financial analysis of Capita, 2011-15
                                                                              • Figure 45: Turnover analysis of Capita in the public sector, 2015
                                                                            • Company strategy
                                                                            • G4S

                                                                                  • Figure 46: Financial analysis of G4S, 2011-15
                                                                                  • Figure 47: Turnover analysis of G4S, by activity, 2015
                                                                                  • Figure 48: Turnover analysis of G4S, by region, 2015
                                                                                • Company strategy
                                                                                • IBM United Kingdom

                                                                                      • Figure 49: Financial analysis of IBM United Kingdom, 2011-15
                                                                                    • Company strategy
                                                                                    • Interserve

                                                                                          • Figure 50: Financial analysis of Interserve, 2011-2015
                                                                                          • Figure 51: Turnover segmentation of Interserve, 2015
                                                                                        • Company strategy
                                                                                        • Rolls Royce

                                                                                              • Figure 52: Financial analysis of Rolls-Royce, 2011-15
                                                                                              • Figure 53: Turnover analysis of Rolls-Royce, 2015
                                                                                            • Company strategy
                                                                                            • Serco

                                                                                                  • Figure 54: Financial analysis of Serco Group, 2011-15
                                                                                                  • Figure 55: Turnover analysis of Serco Group, 2015
                                                                                                • Company strategy
                                                                                                • Siemens

                                                                                                    • Figure 56: Financial analysis of Siemens plc, 2011-15
                                                                                                    • Figure 57: Turnover analysis of Siemens plc, 2015
                                                                                                  • Company strategy
                                                                                                  • Sodexo

                                                                                                      • Figure 58: International breakdown of Sodexo turnover, by sector, 2015
                                                                                                      • Figure 59: Financial analysis of Sodexo, 2011-15
                                                                                                    • Company strategy
                                                                                                    • Thales UK

                                                                                                        • Figure 60: Financial analysis of Thales UK, 2010-14
                                                                                                      • Company strategy
                                                                                                      • Wates Group

                                                                                                            • Figure 61: Financial analysis of Wates Group, 2011-15
                                                                                                          • Company strategy
                                                                                                          • Forecast

                                                                                                            • Key points
                                                                                                              • Market size
                                                                                                                  • Figure 62: Total TME, 2012-16 actual, 2017 expected and 2018-20 planned
                                                                                                                • Market segmentation
                                                                                                                  • Figure 63: Total DEL, 2012-16 actual, 2017 expected and 2018-20 planned
                                                                                                                  • Figure 64: Total DEL segmentation, 2012-13 actual, 2014 expected and 2015-16 planned
                                                                                                                  • Figure 65: Analysis of AME, 2016 actual, 2017 expected and 2018-20 planned
                                                                                                              • Further Sources and Contacts

                                                                                                                • Trade exhibitions
                                                                                                                  • Trade magazines

                                                                                                                  Companies Covered

                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                  Public Expenditure - UK - August 2016

                                                                                                                  £995.00 (Excl.Tax)