26-27th November, 2009
68th EUROCONSTRUCT Conference in Zurich

How will the European construction market develop in the future? The 68th Euroconstruct Conference, organised by KOF Swiss Economic Institute on 26–27 November in Zurich, may offer some answers: 2009 has been the worst year for the construction market in the Euroconstruct area for more than ten years. Construction output has fallen by 8.4%. For next year, we expect another, albeit smaller, decline of 2.2%. A recovery will likely not be seen until 2011. Developments are expected to vary strongly from country to country.

As for the rest of the world, the economic situation in the Euroconstruct area changed drastically towards the end of 2008. Recessions hit nearly all of the 19 Euroconstruct member countries and the whole Euroconstruct area could not avoid tremendous downturns. The downturn in the construction market this year has been even worse than the overall economic downturn. Total construction output has dropped by 8.4%, while GDP is expected to contract by 4.0% by the end of 2009. The total construction output of the Euroconstruct member countries is expected to amount to € 1,365 billion. The construction market accounts for 11% of the Euroconstruct area's GDP. Generally, construction output as a percentage of GDP varies significantly across the European countries and ranges from 8% to 15% this year.

With the exception of Switzerland (3.3%) and Poland (5.3%), all other countries experienced negative growth. However, there are certainly variations from country to country. The greatest declines in construction output were reported in Spain (21.5%) and Ireland (32.2%). Ireland is also the country which has been hit hardest by the recession (a 7.3% decline of GDP in 2009).

Construction output has also declined very strongly in Finland and the United Kingdom: by 14.2% and 12.6%, respectively. Portugal, Slovakia and Italy also performed poorly, with construction output declining more sharply than the Euroconstruct average. The explanation for the downturn is to be found in the huge drop in new residential construction (22.5%), as well as in the sharp decline in new non-residential construction (12.7%), a segment which still grew last year.

Civil engineering is the only market segment which has not declined in 2009. Next year, total construction output is not expected to decline any further after the strong downturn in 2009, but construction output is expected to stagnate until 2012. New residential construction and new non-residential construction segments are expected to continue their downturn. A recovery to the pre-recession levels is not foreseen until 2012. Looking at the developments on a country level, the construction sectors in Poland, Slovakia and Sweden are expected to have the strongest growth rates in 2010 and 2011.

In summary, the outlook for 2010 is not as gloomy as the present situation, but it is still far from being positive. By 2011, the construction market in the Euroconstruct area is expected to be back on track again. Nevertheless, not until 2012 will growth reach a level comparable with that before the recession. In 2010, the economy as a whole is likely to grow at a faster rate than the construction sector. In 2011, both the economy and the construction sector will likely grow at the same pace. However, in 2012 the construction sector should outperform GDP growth.

To counteract the economic downturn, several countries launched fiscal stimulus packages of various sizes. Parts of the measures were pointed towards the construction sector. The phasing out of the stimulus packages, but also the required consolidation of the public finances, will put a negative impact on the construction activity financed by the public in the coming years.

Yngve Abrahamsen
Organisator of the 68th EUROCONSTRUCT Conference



For further information and more data about the European construction markets get in touch with your local Euroconstruct partner institute.

Additionally two reports, the "Summary Report" and the "Country Report", published by EUROCONSTRUCT are available.
You can order them from your local EUROCONSTRUCT member.

For questions regarding a particular construction market please feel free to contact one of our local EUROCONSTRUCT partners.

Please find your local partner institute here