Spain leads stronger construction markets as European growth remains subdued
Europe’s construction industry is facing another subdued year, with high financing costs, expensive materials and weak housing economics continuing to […]
Despite a subdued outlook for Europe's construction sector in 2026, Spain is emerging as a stronger performer, according to forecasts. Credit: Maksim Safaniuk / Shutterstock.com. The industry is grappling with high financing costs, expensive materials, and weak housing economics across the continent. Spain's construction output is set to increase by 3% in 2026 following a more than 25% drop between 2019 and 2022.
Housing permits have nearly tripled since 2020, but the recent slowdown shows signs of easing, with permits falling nearly 2% in the second quarter of 2025. However, Spain faces greater exposure to sudden cost increases due to public contracts lacking price-adjustment mechanisms. In contrast, France is expected to contract by 2.5% this year, while Germany is projected to return to growth after five years of decline.
Poland is forecast to remain relatively flat before improving in 2027. The UK is not included in the EU-specific forecasts. Infrastructure remains the strongest support for Europe's construction sector, with energy construction benefiting from renewable power and electricity-grid investments, and railway projects seeing high-speed investments in Spain and Portugal.
EU building permits are stabilising after rising by around 15% between summer 2024 and the end of 2025 across major urban markets.
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