Construction growth in at least four Eastern European countries is predicted to knock the UK’s into a cocked hat over the next three years
Is now a good time to expand into European markets? It may seem an odd question, but maybe it’s not such a dumb thing to consider. The uncertainty generated by the EU Referendum has ruffled the home market. The pound may have strengthened of late against the Euro, but it’s still well down on its pre-referendum rate. This makes UK firms look more attractive in overseas markets and the money they earn in foreign currency will be worth more at home.
So the temptation to at least look seems strong. There must be plenty of architects toying with the possibility of seeking opportunities abroad for growth.
Ironically, as Britain looks to leave Europe, for architects there may be good reason to enter the market before a Brexit deal is settled. Whatever Brexit turns out to mean in practice, it may well prove more straightforward or advantageous to build relationships while the UK is still officially a member of the EU.
So, how are the construction markets in Europe looking?
Handily, that’s just the question posed by Euroconstruct, a conference held every six months that brings together the construction-economics brains from 19 European countries to discuss prospects. The results are in for the most recent deliberations, which took place in Barcelona in late November.
Unsurprisingly Brexit was a major topic and the consensus was summed up neatly in the opening paragraph of the post-conference press release, which reads: ‘Maybe Brexit has not yet caused a direct disaster on the European economy, but it has indeed lowered the mid-term expectations, of course combined with a long list of other factors: China slowing down, Germany slowing down, uncertainty in the US, European banks still not out of trouble, interest rates likely to increase…’
Certainly, if you compare the expected growth rates for 2016 onward with the forecasts presented six months earlier there is a clear downward shift. But the good news is that the overall forecast is for growth (see graph below).
The expectation is for the 15 Western European nations represented in Euroconstruct to collectively increase construction activity by 2.4% this year and then begin to slow, reaching an annual rate of 1.9% in 2019. By that time the market is expected to be about 6% larger than in 2016.
The four Eastern European nations represented – the Czech and Slovak Republics, Poland and Hungary – are forecast to come out of a dip of 3.3% this year, which followed a couple of years of quite strong growth, and return to solid growth averaging an annual rate of more than 5% until 2019. The market across these four nations is set to expand by almost 17% over the three years.
In the rankings of growth over the period from 2016 to 2019, the UK is expected to be very much at the lower end, above Sweden, Germany and Finland. Furthermore, its downgrading from the previous forecast was much larger than for most other countries.
In terms of market sectors new housing seems to be the star, netting the most construction growth across Europe. New non-residential construction is still in the recovery phase and below its 2012 level, but it is expected to see moderate growth. Renovation is set to continue its slightly stodgy, more dependable growth rate.
Civil engineering work is expected to have stuttered this year, when the figures are finally in, having pulled out of recession in 2014. The aggregate forecast is for growth to resume in 2017.
However accurate these forecasts may prove, the picture they paint is of a Europe with better mid-term opportunities than appear to lie in the UK.
They used to say the only constant was change. Today the only constant seems to be uncertainty.
To slightly misquote Fawlty Towers’ much underrated philosopher Manuel: ‘We know nothing.’ So? Perhaps an audacious #Brexpansion into the European construction market is an appropriate antidote for those feeling the #Brexitblues.