UK construction sector output growth is set to fall back in line with other European countries after outpacing them last year, according to new research.
In 2022, UK construction saw output growth of 5.6 percent compared to the European average of 3.0 percent, according to independent forecasting network Euroconstruct.
But this year, UK output is expected to fall by 1.5%, compared with a 1.1% drop expected across the continent.
The biggest falls are expected in Finland (-5.9%), Sweden (-8.2%) and Hungary (-7.6%).
Several countries are expected to grow their production this year, with the largest increases expected for Spain (3.2%), Ireland (2.1%) and Portugal (1.2%).
The UK is also expected to have higher construction price inflation of 8.1% compared to 6.5% in Europe between April 2023 and April 2024.
Looking ahead to 2024, the UK is forecast to grow output by 1.1%, higher than France (0.7%) and Germany (-1.6%), and well ahead of the expected European average of -0.7%.
Analysts Barbour ABI, working with the network’s UK representative Experian, attributed the overall drop in output to inflation, rising interest rates and a slowdown in the global economy.
Barbour highlighted challenges in the residential sector as “the main driver of Europe’s negative forecast”, with a “big fall” forecast for 2023.
The UK is “performing relatively poorly” in this area, with a predicted residential fall of 7.1%, although it said countries such as Sweden “could see a fall of more than 30%”.
Barbour chief economist Tom Hall said Europe’s construction sector saw “an unexpected hit last year as energy prices stabilized and supply constraints eased they reduced,” but commented that “now it seems to have been a period of transition.”
Hall said the impact of rising interest rates and inflation was starting to be felt across the continent, while “the effects of the post-Covid recovery are also fading”. He added that “the UK seems to be doing reasonably well, sitting close to the average and measuring up well against countries like France and Germany”.
Hall said that while the UK had avoided the “extreme swings” in other countries’ output forecast, “there are still challenges ahead and uncertainty remains”.
