Europe Construction Market Report 3Q/4Q 2025
Executive summary
While growth remained positive across most markets, its pace differed country by country.
Several economies demonstrated renewed momentum, while others struggled with weak private investment and the lingering effects of higher financing costs, each following a distinct path shaped by domestic investment, labour dynamics, and policy measures. Public programmes and EU-backed infrastructure spending once again played a central role in sustaining sector resilience.
In the first half of 2025, macro trends pointed to a modest, uneven recovery: GDP expanded in most countries despite weak industrial output and restrained private capital formation. Poland continued to benefit from a tight labour market and firm consumer demand, while Austria and Germany remained weighed down by slow investment and fragile sentiment. European Commission forecasts point to a gradual pickup through 2025–26, underpinned by stabilising inflation, modest real wage gains, and continued deployment of Recovery & Resilience Facility funds.
Inflationary pressures eased across most markets, with euro-area headline inflation broadly around the 2% mark in mid-2025, supporting consumption and confidence — although country-level divergences persist. Hungary and Slovakia recorded temporary inflationary upticks in early-to-mid 2025 linked to energy-price dynamics and policy measures; both economies are expected to see inflation moderate again into 2026. Unemployment remained broadly stable in the euro area (around 6%–6.5%), with higher endemic rates in France and Spain relative to many Central and Eastern European countries.
Construction performance was mixed and sector specific. In Czechia and Romania steady activity was underpinned by public investment and solid project pipelines, while Italy faced subdued residential activity amid high borrowing costs and elevated input prices. Portugal stood out for relatively strong order books and positive construction output, supported by tourism-linked investment and urban redevelopment.
Government intervention continued to be pivotal. Targeted public investment in transport, energy transition and housing remained the primary support in the near term, while sustainability and efficiency considerations continued to shape project design and regulation. As H2 2025 progresses, the sector must balance persistent uncertainty in private demand with longer-term opportunities from EU funds, green transition priorities, and any further easing in financing conditions. The following country reports provide a roadmap for the sector’s Path to Progress, connecting current performance with future potential.
With the first two quarters of 2025 now concluded, Europe’s construction sector has continued to navigate uneven economic conditions, shifting policy frameworks, and sector-specific headwinds.
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