The “Economist” reports on the poor state of the construction sector in Europe, highlighting its connection to the slow and fragile growth of the European Union. Several factors contribute to this situation. High interest rates make financing for new projects expensive.
While supply chain issues for raw materials have been resolved, construction costs remain elevated. The rise of remote work has reduced the need for new office buildings, impacting demand. Additionally, although wages for Europeans are increasing, their purchasing power is not growing at the same rate, making potential buyers more cautious.
The construction sector accounts for 9% of the European Union’s GDP.
The sector has been declining since 2023, and according to the report, a recovery is not expected. Recent surveys have shown that new orders are decreasing and companies are laying off staff. Businesses are also pessimistic about future growth despite a rebound in housing prices in countries like Germany.
Although the European economy is growing, albeit slowly, the construction sector continues to “feel the pressure,” it will take time for the recovery in real wages and the decline in interest rates to boost the industry once again.
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