Growth returns to Europe’s construction sector

The forecast shows that after construction activity in the 19 Euroconstruct countries declined by 2.1 percent in 2024 – making it the worst year since 2020 – the negative trend is expected to reverse from 2025. Production is forecast to increase by 0.3 percent in 2025, followed by growth of around 2 percent annually in 2026-2027.

Housing Construction to Drive Recovery

The turnaround will be primarily driven by residential construction, which is expected to recover from 2026 after continued decline through 2025. Improved financing conditions resulting from lower interest rates and EU investment funding are supporting housing demand despite rising construction costs.

Non-residential construction faces a more challenging outlook, with sluggish domestic demand and weak public sector finances expected to limit growth across most European countries. Civil engineering construction is also projected to see only modest increases in the coming years

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Strong Variation Between Countries

Growth prospects vary significantly across the region. Seven Euroconstruct countries are expected to achieve double-digit cumulative growth in 2025-2027, led by Poland (16.5 percent), Sweden (15.8 percent), and Ireland (15.2 percent).

Among the largest markets, Spain (10.5 percent) and the UK (10.3 percent) are forecast for strong growth, while France expects more modest expansion of 3.7 percent. In contrast, Italy’s construction market is predicted to decline by 5.8 percent, with stagnation expected in Germany, Austria, and Belgium.

The projected 4.6 percent cumulative growth for the total Euroconstruct area reflects the high level of uncertainty surrounding Europe’s economic development, with the recovery expected to be gradual rather than robust.