How does construction output in the UK compare to EU?

It’s been a case of mixed fortunes for the UK’s construction industry in recent years. With the latest stats revealing that the sector’s output is forecasted to drop back in line with other EU countries, it’s time to take a look at what caused this latest change and where we go from here.  

2022 performance 

The UK construction industry saw a growth of 5.6%, according to research by forecasting network Euroconstruct. This was significantly higher than the 3% average seen across Europe.  

These results follow the pattern set in late 2021. By the third quarter of that year, the value added by building activities in the UK exceeded returned to pre-pandemic levels. There was significant growth in the north-east, East Midlands, and eastern regions, reaching above 45%.  

It’s likely this rapid growth saw many construction businesses having to quickly review their facilities. With more construction work in place, considerations like  considerations like site accommodation hire and investments in more tools and equipment became necessary.  

The economy 

While output in construction was high into 2022, there were external factors that affected the industry. A major influence on these figures was the soaring rate of inflation. Both EU countries and the UK have been affected by the global economic issues in the last two years.  

Inflation in the UK seems to have peaked at 11.1% in October 2022, while the EU peaked in September 2022 at 10.9%.  

While issues like cold weather also have an impact, it’s major economic shifts like this that can have a significant effect on how the sector fares. And this uncertainty around the economy is set to continue into 2024.  

Where we are now 

Euroconstruct predicts that the UK’s output in 2023 will fall by 1.5%, compared with the 1.1% drop predicted in the EU. But individual European countries are set to see even bigger falls, with Finland forecasted to drop in output by 5.9%, Hungary by 7.6% and Sweden by as much as 8.2%.  

Balancing out the figures to make the EU surge ahead of the UK, however, are Spain, Ireland, and Portugal. These are all set to see output grow in the construction sector. However, these are mixed fortunes for European countries overall, taking us into 2024 with a level of uncertainty. 

Where next?  

The challenges posed by inflation rates are set to continue into next year. The UK is already in line for higher inflation of construction prices. These stand at 8.1% compared with 6.5% across Europe between April 2023 and April 2024. 

However, there are signs of growth in the new year for the sector. The UK is predicted to grow its output to 1.1%, which is higher than France at 0.7% and well above the European average of -0.7%, which is expected to affect the continent.  

There is still a way to go until we see a change in inflation rates and until that happens, the construction industry is set to continue to see the impact.