Financial crisis retards growth in the European construction industrySelected results of the Euroconstruct summer conference 2008

In June 2008 representatives of the institutes in the Euroconstruct research and advisory network met in Rome for their summer conference. On the basis of their analyses, European construction volume could decline slightly this year for the first time since 2002. The real estate crisis in the US and the international financial crisis this has touched off have led throughout Europe to massive losses in the financial sector. In particular the liquidity crisis - the unwillingness of credit institutes to lend each other money - has caused a clear rise in mortgage interest rates in many European countries. In addition the fear of further losses has induced banks to sharpen their credit conditions drastically. Together with the general economic cooling, these are not good signs for the pro-cyclical construction industry. All in all, European construction measures should remain at the level of 2007 this and next year. Growth impulses will come from civil engineering and to a much lesser extent from commercial construction. The most important of the three sectors, residential construction, will shrink noticeably. For 2010, however, a recovery is forecast both for residential construction as well as for construction as a whole. The negative macroeconomic conditions in some of the larger European countries will of course have considerable effects on the construction industry in Europe. In the ten smaller western European countries slow growth is expected, on average, up to 2010, but the outlook is still excellent in the four eastern European states.