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The Construction Industry in Europe: Introduction

The construction industry not only drives growth and jobs across Europe but also across all of Europe's individual economies. It plays a major role in the EU's gross domestic product and employment rates, but it also has a direct impact on the daily lives of EU residents by influencing the economy, quality of life, resource consumption, and environmental sustainability.


Europe and the rest of the world will face societal and economic issues that can only be met by the performance of the construction value chain and the policies that support it. The value chain, especially in the area of energy efficiency in buildings, stands to benefit greatly from these challenges.


Despite enormous progress, the building industry in the European Union still has a long way to go before it can adequately solve the most pressing economic, social, and environmental issues of the current time. It is critical to take immediate action if strategic goals are to be attained.

Transformation Needs in the Construction Value Chain

In order to speedily provide buildings and infrastructure solutions that meet these trends and future demands from end users, the construction value chain is projected to undergo major changes in the coming decade. Though the shift to a low-carbon economy is a primary factor in the current upheaval, demographic and societal shifts, resource scarcity, and urban revitalization will all have significant impacts on the sector's future.


When it comes to updating the building industry's value chain, a complete overhaul of manufacturing practices and structure is essential. Building quality, safety, working conditions, and environmental compatibility will all improve as a result of digitalization, new technologies, new materials, and recyclability in the construction industry.


The industry as a whole needs to better adapt to new technologies, despite the fact that many novel solutions are already being used on a limited scale. In order to transform the construction industry, new forms of collaboration within the construction value chain and new contracting models are needed to better align incentives for all parties involved.


Traditional operators in the construction industry will face rising competition from start-ups and large technology corporations joining the sector with revolutionary new business models. The value chain could benefit from the involvement of trade groups, which could help create standards and establish common goals, as well as improve coordination and cooperation along the chain.


Policy Support for the Transformation of the Construction Value Chain

The construction value chain will undergo considerable changes in the next decade to match these trends and future end-user needs. Demographic and socioeconomic trends, resource constraints, and urban redevelopment will also affect the sector's future.


Changing manufacturing practices and structure is necessary to update the building industry's value chain. Digitalization, new technologies, new materials, and recyclability will increase building quality, safety, working conditions, and environmental compatibility.


The industry must adapt to new technology, notwithstanding the limited application of many inventive solutions. New forms of collaboration throughout the construction value chain and new contracting methods are needed to change the construction sector.


Traditional construction operators will confront competition from start-ups and tech companies with new business models. Trade groupings could promote coordination and collaboration along the value chain by creating standards and common goals.


Exchange of Views

In response to these difficulties, the Construction 2020 Strategy and Action Plan chain of value in construction to begin:


Clean Energy for All European Countries

A number of detailed steps pertaining to investment funding in clean energy buildings.

The following issues have been submitted to the High-Level Working Group on Competitiveness and Growth.


How can governments at the national and regional levels do more to encourage investment in second-tier cities' efforts toward sustainable urban development and the built environment?

How can countries and regions, make sure that sustainability and resource efficiency are no longer fringe topics? What potential do laws, norms, and environmentally friendly and creative government contracts have?

What steps could the European Commission and Member States take to encourage digitalization and innovation across the construction value chain, particularly among SMEs, and the implementation of smart technology in buildings and infrastructure? How can we lessen the blow of the digital revolution's possible drawbacks?

What are the most significant regulatory obstacles faced by construction enterprises when attempting to trade building items and deliver services across borders in the European Union? What role might EU policy play in lowering these impediments?

New Challenges of the Construction Industry in Europe

Nearly 1,600 billion Euros were generated in the construction industry in 2018; after five years of development, this is still much below the peak level, and there are significant variations between nations. Out of the 15 western EC-15 countries, 10 saw greater total building volume in 2018 than in 2007.


The Spanish construction market has expanded for four consecutive years, but it is still roughly four times smaller than it was in 2007. The Italian and Irish markets are also down by more than a third from their 2007 highs.


Poland's construction activity, on the other hand, increased by 63% between 2007 and 2018. The current and medium-term EUROCONSTRUCT forecast shows a slowing of growth tendencies in European construction.


The external upheaval and world trade turbulences restrict industrial production and a tendency to invest in Europe.


Even if the economy is in decline, it is still viewed in a positive light. The most recent macroeconomic projections do not call for a worldwide recession, but rather a mild expansion of 1-2% in 2020-2022.


Despite a slowdown, economic factors, demographic effects, impacts on infrastructure, and government environmental policy all contribute to a favourable environment for the growth of the building industry.


As a result of these and other reasons, construction output is expected to rise in the next 4-5n years.


The rate of output growth in the EUROCONSTRUCT region is forecast to slow to 2.3% in 2019 from 3.2% in 2018, and to stagnate at 1% in 2020-2022.


After five years of rapid expansion in new buildings at the expense of refurbishment, the tide will turn in 2020 and 2022 as a result of a slowdown in new investments.


Ireland has the highest cumulative growth in 2019-2022 (+30.1%), followed by Hungary (+16.7%) and Poland (+15.7%). In 2020-2022, the average annual growth rate will decrease for all types of buildings.


Germany, the largest European construction market, is expected to see a decline in production of more than 2% between 2020 and 2022, following a slight increase of 0.8% in 2019. This is a development not very different from that of France, but it is associated with a decline in investments in non-residential buildings, particularly in the new non-residential buildings and infrastructure sectors.


Even more pessimistic projections for Finland and Sweden, two of the Nordic countries most at risk of seeing output decline over the next three years.


As part of its post-pandemic Green Recovery, the EU is developing new ways of thinking about buildings and construction. The needs of people and infrastructure are being reevaluated in light of the new ramifications of construction work, including energy generation and efficiency, recycling of materials and procurement of raw materials, and transportation of equipment and materials.


The building industry in the EU is responsible for roughly 40% of the region's total energy consumption and 36% of its total energy-related greenhouse gas emissions. However, each year just 1% of buildings receive renovations to make them more energy efficient.


The Commission's long-term goal is to ensure that building renovations result in greater energy and resource efficiency and to at least double the current rate of renovation activity during the next decade. As a result, the environment will benefit from fewer greenhouse gas emissions, digitalization will be promoted, and material reuse and recycling will be facilitated.


Up to 160,000 new green employment might be produced in the construction industry by 2030 if the nation's 35 million structures were rehabilitated. The European Union (EU) has set a goal of being climate neutral by the year 2050, and among the measures, it plans to use to get there is the carbon border adjustment mechanism (CBAM), which was unveiled as part of the European Green Deal.


The CBAM will standardise the cost of carbon across both domestically produced and imported goods in an effort to encourage manufacturers outside the EU to adopt more environmentally friendly practices. The initial exemptions from the law will include a wide range of industries, including but not limited to iron and steel, cement, fertilisers, aluminium, and energy generation.


It will be difficult for EU policymakers and Member States to reduce emissions from the building sector due to the volume of waste generated. This is especially true when considering the need to address global supply chains as a whole.


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