According to the Economic and Steel Market Outlook 2025-2026/Q3 2025 Report from the Economic Committee of the European Steel Association (EUROFER), in the first quarter of 2025, construction output in the EU recovered slightly by 0.2 percent year on year.
As expected, residential investments, which are highly sensitive to interest rates, declined for the tenth consecutive quarter, down 1.5 percent in the first quarter, while civil construction investments posted a 1.8 percent increase.
Construction output has remained under strain since the third quarter of 2022, affected by a combination of rising construction material costs, labor shortages in several EU countries, and growing economic uncertainty. This pressure has persisted despite ongoing public investment in civil engineering works and infrastructure projects supported by the NEXTGEN EU package.
A major factor has been the sharp increase in interest rates during 2022 and 2023, the result of tighter monetary policy. Although the European Central Bank has recently carried out eight policy rate cuts, their impact has not yet fully materialized especially in the housing sector since the effects of monetary easing typically appear only with a time lag.
