European Construction Outlook: Tracking Growth Rates

The European construction market has stabilized, and several major economies are showing signs of modest momentum. Interest rate cuts, pro-infrastructure policy agendas, and pent-up residential demand are starting to spur investment after a prolonged slowdown. Early signs of recovery are evident in the Netherlands and the Nordics, while France and Germany are on a slower path back to growth. Italy, the outlier, faces a near-term contraction as earlier incentives taper off.

The medium-term outlook for the region is positive. New residential construction is expected to lead the recovery, supported by public housing programs and a push for environmental, social, and governance–aligned retrofits. Infrastructure investment is set to expand, fueled by dedicated funding initiatives in Germany and the UK. Office development is rebounding selectively in prime urban areas. Industrial construction is stable overall, with pockets of growth in data centers and reshoring-linked sectors such as semiconductors and clean energy. However, any rebound will be contingent on broader economic stability. Trade tensions, increased tariffs, and other sources of instability could significantly alter the medium-term outlook.