EU construction recovery to slow following 2021 jump

European construction activity is set to jump 5.6% year-on-year in 2021, performing better than previously expected, according to the latest forecast issued by Euroconstruct.

The recovery will take construction activity in Europe to above pre-Covid levels. “The upward correction is based on numerous factors: the synchronous international upswing, the use of infrastructure investment as a classic instrument of fiscal policy, the introduction of generous incentives for building renovation and the growth of the housing sector against a backdrop of low financing costs and rising real estate prices that have favoured the upswing in investment,” says the research and consulting network.

“In addition, the changes induced by the pandemic affected some phenomena already underway, accelerating them or triggering new demand,” it adds.

Going forward, a positive trend for construction in Europe will continue to 2024, but the speed of recovery will slow significantly. Euroconstruct expects activity to jump a further 3.6% y-o-y in 2022, before seeing growth stabilise at 1.2-1.5% y-o-y each in 2023 and 2024, Kallanish notes.

“All non-residential construction sectors will show a relatively better short-term performance, against a more moderate increase in the level of expenditure for housing: in particular, for civil engineering, a growth rate close to 3% per year is estimated, not so far from that expected for non-residential building (+2.5% on average 2022-2024), while for the biggest European market the slowing path should be more pronounced (+1.6%),” Euroconstruct writes in its blog.

At a country level, the positive development is sustained by strong growth of over 4% in Ireland, Spain, Hungary and the UK. A flat trend is expected for Germany and Switzerland, while sectoral output is expected to shrink in Finland and Sweden, the firm concludes.

Emanuele Norsa Italy