EU construction sector output. Learning from mistakes.

In the European Union, the construction sector is of great importance. It provides around 18 million direct jobs and amounted to 8.6 % of the EU’s total GDP in 2016. At the same time, creating innovative solutions for social, climate and energy challenges we face today. Total 42.9 million workers in Europe depend, directly or indirectly, on the construction sector. Overall, the European Union’s internal market provides international partners access to more than 500 million people and approximately 13 trillion Euro in GDP.

1. Crisis of 2008
2. Current State
3. Future outlook

1. Crisis of 2008

The crisis of 2008 hit the construction sector especially hard. Countries experienced a sudden decline in production ranging from -54.4 % in Lithuania in 2009 to almost stable activity levels in Germany and Austria. In countries like Estonia, Ireland or Spain growth rates began to considerably decline even before the year 2009. The drop in construction activities was sudden in most countries. Negative growth rates remained in the entire EU until 2013. In contrast, growth rates returned positive for the EU-28 construction sector.

Annual rates of change for buildings and civil engineering, 2005-2016, Source: Eurostat

Until 2007, construction output in the EU grew each year. However, this output showed a steep decrease from 2008 onwards. From spring 2008 till early 2013, the overall level of total construction in the EU-28 experienced a constant decline (excluding a spike in the summer of 2010). On average, this index lost more than 30 percentage points. In the following years 2013 and 2014, construction production recovered somewhat and increased by around 6 percentage points. Despite that, 2016 showed us that we have only reached a level near 80 % of the pre-crisis output peak. Since then the production in construction has increased only very slowly. Especially for countries in the Euro zone (EA-19), which show slower recovery than the average level of the EU-28.

construction output Annual rates of change for buildings and civil engineering, 2005-2016

2. Where we stand now

Today, the construction output of residential and non-residential buildings amount to around 78 % (around 0,997 billion euro) of total construction in the EU-28, and only 22 % (around 0,218 billion euro) for civil engineering works like railways, roads, bridges, airport runways, or dams. Meaning for civil works, the effects of the financial and economic crisis were less visible than for construction of buildings (especially in Spain).

But in order to reach pre-crisis output levels, investments and time are still needed. More on planned construction investment strategy in Germany

No Public Investments on Credit!

Total construction, buildings and civil engineering

Total construction, buildings, and civil engineering work 2005-2016. (2010=100), Source: Eurostat

3. The road to recovery. Greener outlook for the future

The European Construction Industry Federation (FIEC) in their annual report for 2017 has stated that construction activity in the whole EU industry grew by 2.2 % in 2016 (reaching 1,278 billion Euro), compared to 2015. In 2017, a similar increase is forecasted (more than 2 %) and a larger increase of 3 % in 2018 (1,343 billion Euro prediction).

Year Output, Euro The increase compared to the previous year, %
2016 1,278 billion 2.2%
2017 1,304 billion 2.0%
2018 1,343 billion 3% *

*prediction

The initiative for greener buildings will also increase revenues for the European construction sector. The sector has an important role to play in adaptation to climate
change. The Energy Efficiency Plan 2011 is set for 3 % of all public buildings to be renovated per year until 2020. After 2020 for EU-27 countries all new buildings must be carbon-neutral.
Moreover, as more and more countries in the world (e.g. China) push for energy-efficient and nature preserving construction, European innovations will help the worldwide construction sector overall.

Read more about Renewable Energy Projects in Switzerland and the EU

Building Radar steps in

Up to 95 % of construction, architecture, and civil engineering firms are micro-enterprises or small and medium-sized enterprises. In the search of potential partners, their contacts, future construction sites, and investments, we offer a solution on the global scale. Building Radar provides a designed search for specific companies and potential partners in any given construction sector.

To get a more in-depth overview and to check future construction sites in the EU area, schedule a free online presentation with one of our experts at Building Radar.
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