The ongoing Middle East conflict could impact the European construction industry, this 12-day war (as it is now known) is still to be determined, construction costs & the material supply chain could be affected.

The value of the Euro has been progressively declining against the US dollar for the best part of 3 years, some economists are projecting that the Euro could fall to between 0.85 and 0.90 to the US dollar in the next 12 months, this of course will impact inflation in Europe and could be the catalyst to increased construction related materials costs.

The European Union (27 countries) will continue to experience minimal construction related growth, with a low GDP growth rate of 1.3%, with inflation at 1.8% and a reasonably high construction unemployment rate of 6.6% as we move deeper into 2025. A couple of countries such as Poland, Portugal, Norway and the Netherlands are starting to see increased opportunities, but for the most part the rest of Europe will see slow growth in the rest of 2025 as the economic consequences from the war in Ukraine grinds on & the new Middle East conflict casts a shadow on future construction growth opportunities. 

2024 was an extremely difficult year for the UK’s construction sector, 2025 is set to be a much better year with growth forecast to see a 7% to 10% improvement in all construction markets. The UK construction sector is starting to see some positive signs as we move into the second half of 2025 improvement is motivated by enhanced business confidence & enhanced Government infrastructure spending.

The UK Government has recently announced plans to engineer & build a new nuclear power plant in Sizewell Suffolk, in eastern England that will cost between $15 & $20 billion. This power plant will generate more than 3 GW of electrical power & will utilize the design of the ongoing Hinkley Point C nuclear power plant located in Somerset in southern England that is currently being built (approx. 40% complete) employing more than 25,000 people.  This is a huge shot in the arm for the UK construction sector that has been struggling for the best part of 3 years.

Construction activity in the greater London area seems to be reasonably active. New & revamp / upgrades / remodeling of offices & housing units is showing positive signs across all areas of the UK.

Germany continues to be the major economy in the EU. Economic activity in Germany is expected to increase by1.5% to 3.5% in 2025 which will be bad for the construction sector.

German construction permits registered an increase of 7% from this time last year which points to a positive sign for the German construction sector, however Germany still has a long recovery journey ahead. The hope the newly elected Chancellor Metz will perk up the economy & construction sector in the next 3 to 6 months. Germany’s construction market is estimated to be $330 to $370 billion in 2024 and is expected grow to be in the range of $355 to $390 billion by end of 2025.

The German Government have supported a historic $500 billion budget to be expended on new military & infrastructure projects, most likely in response to the Trump Administration’s view on Europe.

Latest feedback from France is that the Construction Industry should see a small uptick in construction activity in the remainder of 2025. France’s leadership in safe & sustained nuclear energy / engineering & construction knowledge plays a crucial role in Europe’s calling for clean energy & zero carbon emissions. The French construction industry is projected to grow by 2.7% to 3% from 2024 levels. The French construction market is valued at $285 to $305 billion.