European construction output will grow faster than expected up to the end of 2019 thanks to strengthening civil engineering and residential markets, according to a leading group of specialist economists.
The latest forecasts were revealed by Euroconstruct, a body that brings together construction market consultants and forecasting organisations from 19 European countries.
The increasingly positive outlook comes despite fears over Brexit and the uncertain political climate in Britain and elsewhere.
The root of their increasing optimism is the recovery in the European economy since 2014, boosted by relatively low oil prices, the Euro exchange rate and the stimulus policies followed by the European Central Bank.
As a result, they expect European construction output to grow in real terms by 2.9 per cent this year, 2.5 per cent in 2018 and a further 2 per cent in 2019 – figures that reflect a market stronger than predicted at Euroconstruct’s previous meeting in November.
Civil engineering is predicted to grow faster still – at 2.0 per cent, 3.6 per cent and 3.6 percent over the same period.
For the UK, they expect construction output to grow by 1.3 per cent both this year and in 2018 and then by 1.7 per cent in 2019, but warned that a hard Brexit could lead to a significant downgrade.
Civil engineering in the UK is still sluggish, with Crossrail winding down, Network Rail’s capital investment programme behind schedule and delays on some big energy projects.
But despite this, Euroconstruct is optimistic and sees civil engineering output increasing strongly - by 3.8 per cent in 2018 and a massive 8.7 per cent in 2018 - as work on a raft of major projects accelerates – such as Hinkley Point, the A14 upgrade, HS2, the Thames Tideway Tunnel (pictured) and the Hornsea Wind Farm project.
“When we look at all 19 countries the level is still 15% below 2007 before the crash, but when we exclude Spain there is a big change - for the remaining 18 countries we can see that the market has recovered from the crisis,” said Oebele Vries, deputy director of the Dutch Economic Institute for Construction and Housing.
“The best performing sectors are the civil engineering and residential markets –with strong growth in Hungary, Poland and Ireland, although the markets in Germany and Finland are stagnating.”
However, several experts warned delegates to be cautious and said that Europe risked seeing another cycle of boom-bust without a new investment strategy – with infrastructure at its heart.
“It is good we are seeing an economic recovery in the Eurozone, which is a bit of a surprise, given the uncertainties,” said Paul Tang, a Dutch MEP and member of the European Parliament’s Economic and Monetary Affairs Committee.
“But if we want steady growth, we need a new investment agenda to help us make the transition to a more sustainable economy. Without action, we will remain a boom bust economy.”