One of the most exciting projects pending in Europe is the Fehmarn Link, a proposed road and rail tunnel under the Baltic between Germany and Denmark.
European CONSTRUCTION: ContinuED growth – but risks remain high The European construction sector has enjoyed a period of good health over the last three years, but too often the industry has made the headlines for the wrong reasons.
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rowth in the European construction sector moved at a good clip from 2016 to 2018 according to the Eurconstruct group of economic forecasters. The fastest expansion was in 2017 when construction output rose by 4.1 per cent, with the rare occurrence of the 19 largest national construction markets in Europe all growing at once, some by impressive double-digit amounts. This period was arguably the first time the segment has been in good health since the global economic crisis a decade ago. Growth is expected to be more subdued over the next few years, but Euroconstruct sees the expansion remaining at 2.0 per cent this year before slowing in 2020 and 2021 as rates of GDP growth dip and the European economy slows. The surge in output over the last few years was driven by high levels of new housebuildEngineers are exploring the feasibility of a floating tunnel across the Sognefjord in Norway.
10 Industry Europe
ing, particularly in Germany. However, with that force now spent, activity in the residential building market is expected to pivot more towards repair & maintenance work from this year onwards. The non-residential building market has been more subdued, partly because a large part of this segment is driven by under-pressure public sector budgets. In the private sector, a big portion of this segment is accounted for by offices. This is an area which is expected to suffer particularly badly in the UK following Brexit due to the anticipated migration of jobs, slowing of the economy and the decrease in investment. On the positive side, the outlook for the civil engineering segment is for strong and perhaps increasing growth. Although this is an area which is also heavily influenced by national and local government budgets, there is money available for road and rail renovation in particular around Europe. In addition, the sector benefits from significant EU-level funding, the main vehicle for which is the Connecting Europe Facility (CEF). CEF applies to a number of sectors, the most important for construction being the Trans-European Network transport (TEN-T) schemes, for which €24.05 billion is available in the CEF budget for 2014–2020. At just over €3.4 billion per year, that is not a great deal in
the context of total European construction output, which the European Construction Industry Federation (FIEC) put at €1.28 trillion in 2016. However, the key point about CEF is that it provides support for schemes which might otherwise not be viable. According to the European Commission website, CEF funds were used to support 75 projects across Europe. The level of support from CEF tends to be around 20 per cent of total project costs making it a significant stimulus for the industry. CEF projects are not necessarily large but they often are. These major schemes have significant positive impact for the industry as a whole.
Infrastructure opportunities Europe is a developed region with a largely complete infrastructure network, so the industry tends to be focused on repair & maintenance, rather than major new build schemes. This means that when a major project comes along it is great news for construction companies. Certainly the UK’s High Speed 2 (HS2) project falls into this category. With the main civil engineering work due to get underway this year, this new rail link between London, Birmingham and beyond should give the industry a significant lift. Having said that, there was concern at the start of this year that HS2 could be cancelled despite design and enabling works being underway. Liz Truss,
