Euroconstruct paints difficult picture for construction

Euroconstruct has forecast that European construction growth will fall to 0% by 2024.

Image: Euroconstruct

It is forecasting of a drop in growth to 0.2% in 2023 across Euroconstruct’s 19 member states, with no recovery anticipated until 2025.

The body that analyses and consults on the construction markets in Europe made its prediction at its recent annual conference, held in London.

The organisation said a significant amount of the negative outlook stems from the residential and residential renovation sectors, fuelled by a fall in consumer confidence and an oversupply in many countries.

The only segment that shows any positive momentum, across the forecast period, is civil engineering.

Country-by-country

Looking back to 2021, and from the perspective of individual Euroconstruct countries, Italy was seen to be the best performer, with output growth of 12.1%, driven in part by EU subsidies.

One of the worst performing member was the UK, which is also expected to suffer moving forward, with a 0.4% fall in output growth forecast in 2023.

Euroconstruct said construction output would fall in eight member countries, with Sweden and Finland expected to be the biggest losers, although both have seen considerable recent growth, so the decline could be seen as more of a levelling off of output.

Mohammed Chaudri, chief economist with Experian, one of the conference speakers, said of the report, “During the past six months, there have been enormous changes in Europe that have impacted the economic operating environment of construction. The Ukraine war and the manifold impacts and uncertainties it induces, rising interest rates, the tightening of the financial market, and the ongoing problems with construction material availability and costs are all playing a significant part.

“Euroconstruct’s November forecast found that nearly all factors which affect construction demand are negative, including the economy, consumer prices, interest rates and consumer confidence. It looks like it could be a rough period of adjustment for the industry, before a return to growth in 2024.”

Tom Hall, Barbour ABI’s chief economist, also gave a presentation at the London event. He said, “The construction industry is experiencing headwinds from multiple directions and things are changing quickly. The economic growth predictions for 2023 have moved accordingly. It was only as recently as June that we were expecting 2.2% growth in GDP – this is now as little as 0.5%.

“Businesses would do well to diversify their portfolios, especially if they are focused on residential projects. There is a glimmer of light though, with civil engineering looking more positive as many countries invest in low-carbon energy and renovate existing infrastructure.”