The outlook for the construction sector in Europe in 2026 is beginning to show signs of recovery after several years of stagnation. According to the latest economic analyses, following a decline in production volume in 2024 and almost no growth in 2025, sector activity is expected to increase modestly this year, with forecasts of around 1.5% growth in production at the European Union level.

Confidence indicators among contractors have improved, reaching levels not seen for more than two years, reflecting a perception that the worst of the slowdown is now behind them. This evolution is supported by an upturn in building permits, especially for new housing, and the continuation of public investment in infrastructure and projects linked to the energy and digital transitions.

The recovery is not homogeneous across countries. The infrastructure sector remains the most resilient, backed by European funds and public spending commitments on networks, energy, and digitalisation, while the residential market is showing signs of stabilisation after years of pressure from high interest rates and elevated costs, with permits rising since 2025, although still far from 2021 levels.

Among the main European markets, Germany, which experienced several years of decline, is projected to return to growth, driven by the recovery of new housing and strong infrastructure investment. Spain shows stronger momentum, with growth expectations of around 2.5%, supported by improved contractor confidence and GDP growth. In contrast, countries such as France and the Netherlands face a more moderate pace of growth or are constrained by administrative and permitting bottlenecks.

Office and industrial construction has suffered due to changes in demand and trends such as hybrid working, with a significant drop in permits for new office buildings. However, renovation and public projects such as hospitals or schools are cushioning part of this weakness, partly motivated by energy efficiency and sustainability requirements.

Regarding prices, the inflationary pressure seen in previous years seems to be easing: few contractors plan to raise selling prices even though input costs remain competitive. This shows ongoing strong competition in a market just beginning to recover. 2026 is expected to see moderate and still fragile growth, driven by public investment and early signs of residential recovery, rather than a sudden increase across all segments. The growth of these factors will be crucial for establishing a clear upward cycle in 2027 and beyond.

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