Europe

Construction growth is not in the cards for the majority of Western & Eastern European countries; it could be another year or two before we see an uptick in construction activity. An uninspiring economic situation does not bode well for major & mid-sized companies, contractors & vendors to spend / invest funds on expansion plans. The best strategy is to wait it out & hope that the economic situation improves. Until the Russia vs. Ukraine conflict is resolved it is difficult to see a change in the current situation.

Construction activity in the UK, is seeing a minor improvement in Office / Admin type construction, together with some roadworks, rail upgrades, power (nuclear type facilities), docks / jetty refurbishments & warehouse / logistics facilities.  The London area remains the bright spot for UK construction activity. UK construction inflation will be in the 3.6% to 3.9% range in the 4th Q of 2025, which is starting to become a problem. 

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 & is approximately 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.

The German construction industry continues to be in a decline that has gone on for close to 5 years. Lackluster demand, high interest rates & the ongoing struggle between Russia & Ukraine are the issues overshadowing the German construction sector. Germany continues to be the major economy in the EU. Economic activity in Germany is expected to increase by 1.5% to 3.5% in 2025 which will be bad for the construction sector.

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 has supported a historic $500 billion budget to be expended on new military & infrastructure projects, most probably in response to the Trump Administration view on Europe.

The French construction sector continues to be somewhat downcast, as it was during COVID, more than 4 years back. High unemployment (especially in the construction sector), currently in the 8% to 11% range is very high, restrained demand, high interest rates & the ongoing conflict between Russia & Ukraine are the issues impacting the French construction sector. 

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.

The Italian construction industry is experiencing a modest uptick in construction activity, still a long way to go to recapture its status / standing it had a decade back. The big news is the approval of 2.2 miles Strait of Messina Suspension Bridge, a $15+ billion connecting the island of Sicily to the Italian mainland. 

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 0.83 and 0.87 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 1.5% to 1.9% & a reasonably high construction unemployment rate of 6.6% to 7.1% 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.