The Hermitage Plaza development in Paris’s La Défense district could overtake the Shard. The Foster & partners design is for two 320m high towers, with an estimated cost of € 2.5 billion.
DOUBLE DIP FOR CONSTRUCTION H
aving reached a peak in value of almost €1.6 trillion (in today’s prices) in 2007, the European construction market has been on the slide ever since. Some statistics suggest it may have managed some growth in 2011, but if the market did bounce back it was a barely perceptible recovery – certainly less than 1 per cent growth that year. Since then the sovereign debt crisis in Europe’s peripheral economies has derailed economic growth in general in the region, and construction output has fallen along with GDP. The problem is twofold. First, the struggling countries were once significant construction markets themselves. In the pre-crisis years, Spain and Italy each accounted for about 10 per cen of Europe’s construction output for example. Greece, Ireland and Portugal were much smaller of course, but at times 8 Industry Europe
were attractive markets owing to their steep growth. This was particularly true of Ireland. The second problem is the way the debt crisis has eroded business confidence in general, discouraging private companies from investing and also depressing the residential market. The theory was in the crisis years that once the immediate threat of financial Armageddon had passed, private companies would start spending again as public investment fell away in the face of the inevitable austerity drive. What has happened of course is that the austerity has come, but there has not been enough private spending to plug the gap. As a result, the Euroconstruct group of economic forecasting companies believes that construction output in the 19 countries it monitors, which make up the bulk of the European market, fell 4.7 per cent
The eurozone debt crisis has pushed the European construction market back into recession (if it ever emerged). The recovery will take at least another year and it will be a weak rebound when it comes. Chris Sleight reports. in 2012. A further decline of 1.5 per cent is expected this year, taking construction output to about €1.28 trillion – near enough a -20 per cent drop from the peak of activity in 2007/8, and taking the market back to about the size it was in 1996. Although a recovery is forecast for 2014, the unpredictable nature of the forces holding back the recovery mean it is not something to count on. The threat of another default in one of Europe’s distressed economies could knock confidence again and further delay the long-awaited up-tick.
Regional variations But as ever in Europe, the headlines figure tells only a limited story. It hides a series of markets that are doing well and some that are doing badly. Frankly, there are also construction
