Gross domestic production, construction output.

Building sector to recover in 2011

Published:  29 September, 2010

EUROPE: The worst is over. According to Euroconstruct, recovery in the building sector will begin in 2011.

Construction output fell by -8.8% in 2009 in Europe. A further contraction of -4.0% is expected in 2010.


By the end of this year, the European construction industry will have been in recession for three years.

According to Annette Hughes, director of DKM Economic Consultants, the Irish member of Euroconstruct: "Several countries have acted to lessen the impact of the recession with fiscal stimulation packages in 2008 and 2009, which supported construction.

"The priority now has shifted towards fiscal consolidation, which will have negative consequences for the industry, particularly for civil engineering.

"In a number of countries, notably Spain, Ireland and Portugal, the crises came on top of the collapses in local housing markets, leading to severe market contractions.

"Job losses have been substantial: the sector employed 13.5 million workers in 2007, or 7% of the total workforce, but more than one million construction jobs have been lost in Spain and 400 000 in Portugal alone.

"We estimate the sector has lost more than 1.5 million jobs since 2007."

Looking across Europe, there is a clear divison between the Western European countries and the Central and Eastern European members of Eurostat.

At one extreme, Ireland, Spain and Portugal are expected to record further deep cuts in construction output in 2010.

At the other, Poland has been barely touched by the global crisis and its industry is expected grow by 10% in 2010.

As a rule, in Western Europe the construction recession has been more severe than the overall economic downturn.

The opposite is the case in Central and Eastern Europe, where the construction sector has acted as a stabiliser for the overall economy.

Looking forward, said Euroconstruct, the prospects for Western Europe are for a sluggish but gradual pick-up in construction activity in 2011 (+0.6%), gathering pace in 2012 (+1.8%).

Ireland, Spain and Portugal will do no more than stabilise at a deeply depressed level however.

Central and Eastern Europe, dominated by Poland and the Czech Republic, is expected to see much stronger growth, of 3.7% in 2010 and almost 10%/year in 2011 and 2012.

The key drivers for this are new non-residential construction and civil engineering, both benefiting from EU structural funds.

Euroconstruct provides decision-makers in the construction sector and related markets with information, analyses and forecasts to enable them to plan their business more effectively.

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