Richard Joyce Managing Director, Europe
Europe’s construction rebound is being built on sustainability, digital infrastructure and public sector demand, with a focus on long-term resilience.
The European macroeconomic outlook into 2026 is defined by cautious optimism. The International Monetary Fund’s October 2025 forecasts indicate moderate growth across the region, with notable upward revisions for Ireland and Spain, while countries such as Denmark, France, Norway, and Finland faced downward adjustments due to weaker exports and domestic challenges. Inflation is generally expected to moderate or stabilise, driven by lower energy and commodity prices, though wage growth and sector-specific pressures continue to shape national trends. Fiscal policy remains a key influence, with government spending supporting growth in several markets. However, persistent risks from global trade tensions and policy, means uncertainty remains.
Europe’s construction industry is showing early signs of recovery, with a projected 0.3% rise in output for 2025, marking a turning point after the previous year’s decline. While some countries, such as Ireland and Spain, are expected to maintain momentum, others including Germany and France are only beginning to stabilise. Growth is led by infrastructure, data centres, energy, and utilities, supported by public investment and policy measures. However, the industry continues to face challenges from labour shortages, volatile material prices, and weak investor sentiment.
Commodity markets remain central to construction cost dynamics. In 2025, while key materials such as copper, aluminium, and steel saw some disruption, they were generally more stable than previous years. Tariff-related developments and supply chain disruptions have influenced pricing, but their impact has been less severe than anticipated. Looking ahead, infrastructure investment, rising input costs, and tightening environmental regulations are expected to drive modest price increases for cement, concrete, and other core materials.
The implementation of the Carbon Border Adjustment Mechanism (CBAM) and revised EU Emissions Trading System (ETS) benchmarks in 2026 will add further upward pressure on costs, reinforcing the need for early supply chain engagement and risk management.
All-in-all, the outlook for 2026 is cautiously positive, with growth expected to be driven by sustainability, digital infrastructure, and public sector demand, though power constraints and regulatory changes will continue to shape delivery.
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