The construction sector is of vital importance to the European economy. With 3 million enterprises and a total direct workforce of 18 million people, the construction sector contributes at around 9% to the GDP of the European Union.
99.9% of the European construction sector is composed of small and medium-sized enterprises (fewer than 250 employee). In the EU, the average size of construction enterprises is of 4 workers (employees or not). Small and medium businesses produce 80% of the construction industry's output. Small enterprises (less than 50 employees) are responsible for 60% of the production and employ 70% of the sector's working population.
Until the end of 2006, construction output in Europe increased steadily but, with the economic and financial crisis, output began to decline quite dramatically. Between spring 2008 and early 2013 the level of total construction in the EU-28 was on a more or less constant decline. However, as from 2015 the construction industry seems to be on the path to recovery, according to data from Eurostat and from Euroconstruct, a network of research centres specialised in construction economics. The recent increase in construction demand is partly due to robust economic growth and its positive implications for household income, corporate profits and the state of public finances. Moreover, low interest rates, internal migration flows (e.g. towards urban areas), as well as the investment backlog that has accumulated since the financial crisis is supporting these positive trends.
In 2017, growth in construction in Europe reached its highest level since 2006: construction investment registered its third consecutive year of recovery, growing by 3,5% in the euro area (4,3% in the EU), but its share of GDP (about 18%) remained clearly below the peak of 2007. And the future in construction looks bright as well: growth is set to remain strong in 2018 and ease only slightly in 2019 with growth 2,3% and 2,0% in both the EU and the euro area, according to the European Commission economic forecast (see Spring 2018 Economic Forecast). Over the forecast horizon, construction investment growth in the euro area is projected to remain strong, at 3,2% in both 2018 and 2019 (3.4% and 3.0% in the EU), with all Member States participating in the expansion.
In summary, the European construction market has entered a phase of recovery but reaching pre-financial crisis levels is still a long-term goal that will be reachable only with an adequate regulatory and financial framework.