Committee Reports > List of Committees > Joint > 1986 > Committee on Small Businesses > Report No. 04 - Construction

APPENDIX 3

Construction in European Countries

This Appendix outlines the situation of the Construction Sector in a selection of European countries. Most of the information was obtained from:

(i)The Euro-Construct Conference Papers (June 1984)

(ii)The Construction Industry Situation - Annual Report No. 16 of the European Community Contractors (1985).

1. Belgium

It seems as if Construction output in 1984 increased very slightly compared with the very low level of activity in 1983.

There has a gradual decline in public sector demand since 1980, which has been offset to some extent by an increase in private sector demand.

However, medium term forecasts indicate that Belgium will find itself with excess construction capacity of at least 35% for several years to come.

The percentage changes in output in recent years were:

Employment in Construction has fallen from 250,000 in 1984 to 150,000 now.

2. Denmark

After a number of years of declining activity Construction output actually grew by 10% in 1984 but a small decline in output is forecast for 1985.

The 1984 upswing is explained to a large extent by a fall in interest rates in 1984 to 14-15% from levels of 22-23% in 1983.

Much of Danish Construction work is accounted for by energy projects including a pipeline for energy reserves in the Danish section of the North Sea.

While there have been heavy fluctuations in employment patterns over the last 10 years Construction employment, now at about 130,000, is close to that of 1974.

3. France

Construction output in France has been progressively downwards:

A further decline is anticipated this year and there has been a decline of 21% in employment since 1980.

The drop in output has been more pronounced in public sector demand which fell by 9% in 1984.

There will be a further decline in the Sector, assisted by a contraction in demand for French civil construction in export markets.

Construction employment has fallen continuously from 1.6m. in 1976 to 1.2m. now.

4. West Germany

Construction output percentage changes for 1982/84 were:

However Construction this year is forecast to decline by 5.5% with housebuilding suffering more than other sub-sectors.

The numbers unemployed and on short-time working continue to grow and by the end of 1984 some 200,000 direct construction workers were unemployed.

5. Italy

Construction output changes for 1982/84 were:

The decline in Construction is expected to slow this year. All sectors have shared in this decline, but housebuilding has suffered most.

With regard to housing it is claimed that houses have lost their appeal, at least for the time being, as a form of investment. In 1982 Italian inflation was 16.7% but house prices rose by only 2% and it became more profitable for Italians to invest in Government bonds and securities.

In 1974 employment in Construction was just over 2m. and peaked at 2,150,000 in 1981 but is now below 1.9m.

6. Netherlands

After a fall of 2.5% in 1983 and an increase of 1% in 1984, overall Construction output should fall by 1% in 1985, mainly due to a decline in house building and public projects, both areas where there is strong Government influence.

Employment in Construction has fallen from 460,000 in 1974 to 330,000 now.

7. Great Britain

Construction output for 1982-84 was as follows:

Construction growth is now considered to have peaked from the very low levels of the early 1980’s and there will be no growth this year and, indeed, a slight down-turn is forecast for 1986.

There is considerable concern in Britain at the deterioration of the country’s housing stock and necessary renovation could cost GB£19bn.

The Confederation of British Industry has consistently argued that Britain’s road infrastructure is below general EEC standards and that there is an economic argument for increased investment.

However, Government response so far, to arguments for increased investment in these areas, has been muted.

8. Sweden

During recent years the Swedish Construction sector has experienced a continued drop in activity:

A further decline is anticipated this year, with repair and maintenance being the only area of Construction to show steady growth. Unemployment among Construction workers grew from 3.5% in 1980 to 9% in 1983 and continues to grow.

9. Switzerland

Output in recent years was:

The growth in output in 1983 and 1984 was largely due to housebuilding and renovation.

Outlook for European Construction.

The demand for Construction in Europe is undergoing a structural change. The continuing housing and infrastructual improvements which started in the post-War years and in which there was substantial investment until the mid 1970’s, will now take place at a lower level.

The improvements that have already taken place in housing, combined with a static or declining population in most European countries, have resulted in a lower demand for new housebuilding.

Similarly, the heavy investment in motorway infrastructure by European countries means a lower level of investment in future. Indeed public sector civil engineering investment fell by 40% in the decade to 1980.

Employment in Construction in most European countries has been in constant decline during this decade and no significant improvement is expected in the medium term. Within a reduced Construction sector renovation and maintenance of existing assets will play an increasingly important role.