Miguel Blanco Lopez Summary Construction Problems Spain

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Miguel Blanco Lopez Summary Construction Problems Spain
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  Miguel Blanco López, MSc Construction Project Management student 21/10/2013 Summary of major problems associated with the construction Industry in Spain. In 2007, just before the housing bubble burst, the construction sector represented 10% of Spain’s  GDP, reaching a record of 20% in 2005, employing 11.3% of the working population and representing 57% of the Investments in Spain. Nowadays, the circumstances have dramatically changed due to the exhaustion of the growth model supported by tourism and construction. Currently this sector only gives work to 7.2% of the employing population. The consequences are many and explained below: Impossibility of the market to soak up the huge amount of new finished and empty houses. As a consequence of this a fall in the price of houses has occurred, from € 2905 per sqm 2007 to € 2102 per sqm in January 2013. The financial problems of the Spanish banks are preventing the allowance of credit, which preclude the sales of houses and the development of new projects, forcing companies to go abroad and research new markets. The accrued debt of construction companies is forcing a divestment policy and as a result there is a continued increase in the number of redundancies, for instance FCC one of the largest construction companies in Spain has recently fired 842 workers. Nevertheless, the accrued debt of the six largest companies in Spain has decrease from 45,000 to 40,000 million Euros in less than one year and are winning a great deal of international contracts which actually represents 80% of their turnover. Despite the fact that some financial problems are solved, it still remains that banks fail to award credit to produce a recovery in the sector and in the overall Spanish economy. References: Lawson, (2011, August 5). Construction Sector in Spain.  http://www.actibva.com/magazine/economia/el-sector-de-la-construccion-en-espana   EP, (2011, December 4). Construction Sector reduces six percent regarding to GDP since 2005. Cinco días http://cincodias.com/cincodias/2011/12/04/empresas/1323169135_850215.html  EFE, (2013, May 5). The six largest Spanish Companies accrued a debt up to 40,000 millions of Euros. El País   http://economia.elpais.com/economia/2013/05/19/agencias/1368961469_720708.html  
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