|
Report from
Europe
Euroconstruct predicts slow European construction growth
The view from the Euroconstruct conference in Warsaw,
Poland held in early June was that European construction
from 2025 to 2027 will see a return to growth, albeit
modest. This despite continued political and economic
uncertainty due to the war in Ukraine and changes in US
tariffs.
Meanwhile, the latest outlook, released June 23, for
construction in Eastern Europe from the Eastern European
Construction Forecasting Association (EECFA) forecasts
continued stability in the southeast of the region but less
optimism in the eastern area. After contraction in the 19
country Euroconstruct area in 2023 construction output
across its 19 member countries fell a further 2.1% in 2024.
Participants at the Euroconstruct Conference, however,
heard that the inflationary shock caused by the outbreak of
war in Ukraine is gradually subsiding and the overall
economic outlook is positive. Falling inflation and lower
interest rates have also improved construction financing
conditions
Euroconstruct’s summer forecast predicts an increase in
housing demand and infrastructure investments despite the
rising costs of construction activities.
“In 2025 the downward trend will be broken and
production in the Euroconstruct area will increase by 0.3%
and in the following years 2026-2027 will increase around
2%” it says.
Euroconstruct predicts that value of the construction
market across member countries in 2027 will still be 1.4%
lower than the level of 2021 but 3.5% higher than 2024. It
forecasts that the downward trend in residential
construction will continue through 2025 but from 2026 to
2027, growth will return.
In fact, it says the cumulative growth of 4.6% in
Euroconstruct countries from 2025 to 2027 will be ‘driven
above all by construction of residential buildings’.
It says sluggish domestic demand and weak public sector
finances are likely to continue to hinder non-residential
construction growth in most European countries while
civil engineering construction will see low growth.
Prospects vary
Looking at individual Euroconstruct countries, from 2025
to 2027 Poland is forecast to see 16.5% growth in
construction output, Sweeden 15.8%, Ireland 15.2%, Spain
10.5%, UK 10.3% and France 3.7%. In Italy output is
expected to contract 5.8% while Germany, Austria and
Belgium see stagnation.
The new 2025 to 2027 forecast from the EECFA predicts
that in its Southeast region building output will remain on
a level with 2024. But since the area has experienced some
strong years recently ‘these markets could hold on to their
high level of output’.
Total construction output in Bulgaria is anticipated to
grow by 3% on average for 2025-2027 with stronger
growth in the middle of the period when the absorption of
operational programmes and the implementation of a
recovery and resilience plan is expected to gain
momentum. Non-residential construction and civil
engineering are expected to perform better than residential
construction.
Croatia’s construction sector as a whole is reported to be
‘vibrant’ due to the ‘combination of a continuing
transitioning-economy catch-up growth and large inflows
of EU money. Civil engineering continues to profit
particularly from EU funding. Government policies
affecting construction will be Croatia’s new National
Housing Policy Plan which is intended to drive affordable
house building and a new tax on real estate.
Romania’s large government deficit is forecast to make it
harder to finance public works and could negatively
impact civil engineering. Its construction sector outlook
overall remains negative.
However, inflation and interest rates are heading down,
and employment indicators remain strong, so says the
EECFA, private consumption could boost demand for
residential and non-residential construction.
Serbia’s construction continues to progress. Non-
residential construction is doing well, particularly
commercial, office and hotel segments, while residential
construction is maintaining ‘historically high volumes’.
Overall performance in civil engineering is also still strong
Total construction output in Slovenia is expected to
decrease in 2024 through 2025 from the historic high of
EUR €5.5 billion reached in 2023, but is forecast to
remain above €5 billion annually in both years. A return to
growth is forecast in 2026 and 2027, ‘mostly on the back
of a healthy growth in residential construction buoyed by
decreasing mortgage rates’. However, civil engineering is
expected to shrink.
As for the EECFA’s eastern region, Russian construction
is forecast to remain under pressure due to the high key
borrowing rate. Tight monetary policy and reduced
mortgage availability will slow house construction, and a
cooling economy will reduce investment in non-residential
building. But civil engineering will be underpinned by
government infrastructure and energy projects.
Turkey saw big declines in building starts and completions
in Q1 2025, but there is growth in home sales through
equity financing where mortgages are unavailable.
Government funding is also diverted into the rebuilding of
the 870,000 houses damaged in the 2023 earthquake,
which will cost an estimated €100 billion.
This year, in spite of the continuing war and economic
instability , the EECFA reports Ukraine’s construction
industry is seeing signs of recovery and growth ‘on the
back of successful programs financing both the
construction of new facilities and the reconstruction and
restoration of infrastructure’.
See: https://www.euroconstruct.org/news/99th-euroconstruct-
conference/#:~:text=On%20this%20basis%2C%20EUROCONS
TRUCT%20predicts,amount%20to%20only%20around%202%2
5.
and
https://www.euroconstruct.org/news/eecfa-summer-2025-
forecasts-released/
European business confidence rises
European business confidence is increasing, according to
the July 2025 European Commission (EC) Economic
Sentiment Indicator (ESI). In July, the ESI picked up in
both the EU, rising 1point to 95.3% and the Euro area,
where it was up 1.6 points to 97.5%.
The EC report on the ESI says that the upturn was driven
by higher confidence in industry, services and retail trade.
There was also a marginal increase in consumer
confidence. On the downside there was a slight decrease in
construction confidence.
Of the larger EU economies, the ESI in France rose 2.4
points, Spain 2.2, Germany 1.2 and Italy 0.4. It was stable
with June in the Netherlands, but down 2.1 points in
Poland.
Industry confidence in July was up 0.9 points, according to
the ESI. This was driven by managers’ ‘brighter
expectations and slightly improved assessments of the
current level of overall order books’, said the EC.
Managers’ assessment of stocks of finished products was
broadly stable and assessment of export order books edged
up. Confidence in the service sector improved 0.7 points,
with a significant increase in managers’ demand
expectations.
Retail trade confidence improved by 0.8 points, with
retailers reporting sharply higher expectations for the
future business situation and an improved evaluation of
stock volume.
Construction confidence declined by 0.6 points in July due
to a decrease in builders’ employment expectations. Their
assessment of order book levels was unchanged. The
percentage of construction managers citing insufficient
demand as a business limiting factor rose slightly to
31.4%. The percentage indicating material and equipment
shortages and financial constraints as limiting factors rose
respectively to 5.5% and 8.7%.
Consumer confidence, according to the ESI, was up 0.3
points in July. Consumer’s perception of their financial
situation improved and their intentions to make major
purchases were stronger. However, their expectations for
the economic situation in their countries worsened.
Selling price expectations picked up strongly in industry
and rose to a lesser extent in services, retail trade and
construction.
The Economic Uncertainty Indicator increased 1 point to
17.3%. Industry and service sector managers reported a
marked increase in uncertainty about the future business
situation, but uncertainty decreased in retail trade and
construction. Consumer uncertainty about their future
financial situation declined too.
According to the July EU quarterly economic situation
survey, the industry estimated rate of capacity utilisation
was up 0.1 points compared to April at 77.9%. Managers’
assessment of their competitive position in non-EU
markets improved 0.2 points and their evaluation of order
developments over the past three months rose 1.3 points.
In services since April, EU capacity utilisation was up 0.5
points to 90.2%.
In the Euro area the estimated rate of capacity utilisation
in industry was unchanged at 77.8%. In services it was up
1.1 points to 90.4%.
See: https://economy-
finance.ec.europa.eu/document/download/8a03467f-3e8e-483f-
9452-6704999e48f9_en?filename=bcs_2025_07_en.pdf
French timber imports declined in 2024
According to a report from French timber trade association
Le Commerce du Bois (LCB), imports of sawn timber,
both softwood and tropical hardwood, continued their
‘structural decline in volume’ in 2024.
“In a global context marked by economic instability,
tightening regulations, and persistent logistical constraints,
the sector is reaching a fragile equilibrium point,” says the
LCB. “The softwood sawn timber market appears to be
entering a phase of stabilisation at a low level, after
several years of decline. Domestic demand remains
hampered by the slowdown in new construction and
renovation.
Tropical sawn timber imports continued to contract more
markedly under the cumulative effect of regulatory
pressure (notably CITES and the upcoming EUDR) and
persistently weak demand.
Volumes are reaching a historic low. Imports of tropical
logs almost completely collapsed.”
French tropical sawnwood imports fell to a historic low of
94,759 cu.m in 2024, down 22% year-on-year. This is the
sharpest fall in over ten years. Africa remained the
leading supplier shipping 56,900 cu.m to France but
French import volumes from the continent fell by 28%
over 2023.
Imports from the Republic of Congo fell 7% to 14,100
cu.m with the decline limited by ‘better logistical
organisation and a more transparent regulatory
framework’. Imports from Gabon were 12,500 cu.m,
adversely affected, says LCB, by the CITES listing of
padouk and transport issues..
“This sudden drop illustrates the strategy adopted by the
countries of the CEMAC zone and the DRC, which intend
to completely ban export of logs by 2028 in order to
develop local processing industries,” says LCB.
French imports of softwood sawn timber in 2024 were
2.29 million cu.m, down 1% on 2023. LCB reports that
imports have fallen 30% compared to the record levels of
2021, but now seem to be stabilising at this lower level.
Softwood sales have been hit by the downturn in French
house building.
LCB concludes that 2024 could mark a transitional period
in French timber imports. Faced with continued low
demand and stricter regulations, it says, most French
importers are striving to secure more traceable, more
consistent, and more resilient supply chains. “Northern
Europe suppliers are thus doing well by consolidating their
positions thanks to the reliability of its sawmills and the
quality of its certifications,” it says.
“The future of tropical woods on the French market will
probably see a move upmarket, the promotion of certified
species, establishment of local partnerships to better
control the supply chain and much will depend on
adaptation to the requirements of the EUDR.”
See:
https://www.lecommercedubois.org/actualites/1343/bilan-des-
importations-2024-vers-un-equilibre-fragile-marque-par-le-
poids-des-reglementations
EU ends Cameroon FLEGT VPA
The European Parliament voted on 17 June to end its
Forest Law Enforcement Governance and Trade Voluntary
Partnership Agreement (FLEGT VPA) with Cameroon
which entered it into in 2011. At the same time the EU
pledged to continue to work with Cameroon on timber
legality.
Ending the VPA was first proposed by the European
Commission late 2024 and according to a report from
French Timber Trade Association Le Commerce du Bois
(LCB) was based on ‘the observation of a lack of concrete
progress in the implementation of the Agreement’.
More than ten years after the VPA’s adoption, said LCB,
Cameroon had still not issued FLEGT licenses for timber
exports to the EU and commitments regarding legality,
transparency and forest governance had not been
sufficient. The Commission and Parliament also highlight
the reduction of engagement with civil society and local
communities, which are at the heart of the FLEGT system.
The official European Parliament bulletin highlighted that
forest loss in Cameroon had continued through the
duration of its VPA, with a further 900,000 ha, or 5% of
the country’s total forest cover, lost between 2011-2022.
LCB reports that the termination was a unilateral decision
by the EU and that Cameroon is yet to accept it.
The LCB concludes that the end of the VPA with
Cameroon “should not lead to a loss of its achievements in
terms of traceability and governance. On the contrary, it
marks a shift towards stronger requirements under the
EUDR. Importers must prepare for these obligations by
securing their supply chains and relying on robust
certification processes”.
See: https://www.lecommercedubois.org/actualites/1351/apv-ue-
cameroun-fin-de-l-accord-mais-volonte-de-maintien-du-
dialogue-annonce
and
https://www.europarl.europa.eu/doceo/document/TA-10-2025-
0119_EN.html
|
