EUROPE'S ECONOMIC slowdown, member states' budget constraints and the conflict in Iraq are likely to be obstacles to any recovery in construction activity in the European Union during 2003.
Construction across Europe was worth $900bn in 2002, growing only 0.6% on 2001. This stagnation is set to continue, according to the latest figures from the European Construction Industry Federation, FIEC. It predicts that even if the knockon effects of the Iraq conflict do not worsen 'an already gloomy economic climate', activity will grow by a mere 0.5%.
Some countries continued to be buoyant in 2002. The UK market grew by 8.1% due to large scale public investment. Spain also had a good year, up 4.6% because of infrastructure investment.
Others did not fare so well, notably Germany, with a fall of 5.8%, following a 6.1% drop in 2001. The German construction industry saw more than 4,500 bankruptcies during the first six months of 2002 and employment in the sector fell by 10%.
Forecasts for 2003 vary considerably across Europe. Some countries are expected to experience falls in activity, including Germany (-2.5%), France (-0.7%), the Netherlands (-2.4%), Belgium (-1.5%) and Denmark (-1.2%).
There will be a slowdown in those with recent sustained growth, such as the UK (+4.4%), Italy (+1.7%) and Spain (+3.8%).
Any growth is likely to come from the civil engineering and non-residential construction sectors, because of more sustained intervention by the public sector in several countries.
The most significant changes in 2002 took place in Portugal and Ireland.
In Portugal, a 2.2% fall in activity is expected this year because of a decline in public-sector investment and the removal of some credit-support tax measures. Investments relating to the Euro 2004 football championships should bring some improvement.
Ireland's drop of 5.4% is attributed to a sharp fall in private non-residential construction and delays in the launch of several infrastructure projects.