Strong civil engineering still can’t offset weak residential in Europe’s sluggish construction market

That is according to a new report from FIEC, an umbrella body representing construction trade associations across the union.

FIEC’s 2025 Statistical Report found that construction investment in the EU declined by 2% in 2024, driven by a sharp drop in housebuilding.

Investment across the EU is expected to decline again in 2025, albeit at a more modest rate.

Residential construction has struggled within Europe for the past several years amid higher interest rates, reduced access to credit and the gradual withdrawal of public incentives. Renovation activity has also slowed.

In 2024, activity across the housebuilding sector fell by 7.7% in the EU, according to the report. A further decline of 3.9% is expected for 2025. The drop has been especially sharp in countries like Italy, Denmark and Sweden, it said, although some markets in southern Europe like Spain and Greece have been more resilient.

Conversely, civil engineering has been the main driver of growth. Activity in the subsector increased by 5.9% in 2024, supported by public investment and green infrastructure projects. It is expected to grow by 5.4% in 2025.

Several countries experienced strong growth in 2024, including Italy (+21%), Lithuania (+19.9%), and Bulgaria (+13%). Others like Portugal (+3.3%) and Sweden (+4.4%) grew at a more modest rate. But a few saw declines such as Finland (–3%), Estonia (–3.3%), and the Netherlands (–1.2%), often due to investment delays or tighter economic conditions.

Non-residential construction was flat in 2024, with a growth rate of +0.1% in 2024. It is expected to remain stable in 2025, although the figure masks differences between member states. There were stronger increases in Italy (+6.5%), Spain (+5.5%), Bulgaria (+14.6%) and Sweden (+5.4%). Others such as Denmark (-10.7%), Finland (-3%) and Germany (-1.9%) saw declines.

The construction sector employed more than 12 million people in 2024, accounting for 6.4% of total employment in the EU27 countries. Meanwhile, the sector accounts for 7.9% of grodd domestic product (GDP) in the EU27.

Read the full report here.