Construction News

Thu June 24 2021

Related Information

European construction faces long wait for recovery

19 Jun 12 There will be no overall growth in European construction until 2014, according to latest figures from Euroconstruct. It believes that activity will not return to 2008 levels until 2023.

The increasing perception that Greece will default and exit the eurozone tied to increasing fears of contagion has led Euroconstruct, a group of research institutes and consulting firms, to downgrade its GDP and construction forecasts for this year and next.

Euroconstruct forecasts have been revised downwards in the course of the current debt crises. Construction forecasts for this year and next were downgraded from -0.3% to -2.1% in 2012 and +1.8% to +0.4% in 2013.

The civil engineering sector is predicted to be the worst performing over the next three years, with an annual average rate of decline of 1.4%.

It projects a north/south pattern of construction performance over the next few years, with northern European countries outperforming their southern counterparts.

Even with an improving growth rate of 1.7% in 2014, construction output across the Euroconstruct network will still be nearly 12% down on its 2008 outturn at the end of the current forecast period, it predicts.

Related Information

During the last period of growth (1992-2007) the annual average construction output increase across the Euroconstruct network was 1.5% - applying this growth rate to the future suggests that activity will not return to 2008’s level until around 2023.

Projected GDP growth for 2012 has dropped to close to zero (0.2%), from 1.1% predicted last November, with the forecast for 2013 down from 1.7% in November to 1.3% in June.

Civil engineering now the biggest drag on overall construction performance. The civil engineering sector is predicted to be the worst performing over the forecast period, with an annual average rate of decline of 1.4% over the three years to 2014, compared with a smaller yearly fall of 0.4% for the non-residential sector and growth of 0.9% annually for residential construction. However, both the residential and non-residential sectors have seen much bigger falls (13% and 14% respectively) than the civil engineering one (-7%) between 2008 and 2011 thus are recovering from a lower base.

The idea of a ‘north/south’ divide has been around for many years in assessing regional economic structure and performance in certain countries, said Euroconstruct. However, it has not been terminology that has been applied to European construction in the past. Looking at the respective performance of the construction sector over the forecast period in the 19 Euroconstruct countries it does appear to now have some resonance, the report found. “As with all generalisations it has exceptions, but there is to a degree evidence of a north/south pattern to projected construction performance over the next few years, with countries in the north of the continent performing substantially better than countries in the south. In terms of overall construction performance during the 2012 to 2014 period.”

The Euroconstruct network countries fall broadly into four categories:

  • A small group of two - Denmark and Norway - that are projected to experience growth in excess of 2% per annum on average
  • A much larger group of nine - Austria, France, Germany, Hungary, Poland Slovakia, Sweden, Switzerland and the UK - expected to see modest growth of between 0.1% and 2% a year over the forecast period
  • A group of five countries - Belgium, the Czech Republic, Finland, Italy and the Netherlands - likely to see no growth to moderate decline (0% to -3% a year)
  • Three countries – Ireland, Portugal, and Spain - in which construction activity is still in deep recession.

Got a story? Email news@theconstructionindex.co.uk

MPU

Click here to view more construction news »