European Union member states have been preparing for a challenging winter due to the war in Ukraine. The ongoing conflict, cost of living crisis and a looming financial slowdown are causing a decline in business confidence.

The EU exceeded their gas storage goals ahead of time (80% targeted by 1 November) and thanks to a milder than average October, gas reserves are nearly full at 95.2% in early November, as reported by Reuters.

Falling energy prices and full gas reserve tanks gave positivity to investors surveyed by Sentix and the poll results released on 7 November showed some recovery regarding market outlook. (Euro zone investor morale up for first time since August — Sentix | Reuters).

Global commodity prices continue a downward trend, with aluminium and copper reaching pricing similar to 1Q 2021 and iron ore returning to levels seen in 2Q 2020. However, the elevated costs of energy and fuel continue to pose challenges for production, with construction pricing remaining high for energy-intensive materials.

The monthly construction survey (Eurostat construction survey results), carried out by all EU member states and typically completed by local construction contractors, showed a drop in confidence in the October results. The reduction was particularly seen in work expectations over the next three months, with Hungary reporting the biggest increase in insufficient demand. Next Generation EU financed projects (adopting energy efficient alternatives in buildings) will likely pick up speed and hopefully aide in keeping construction trades occupied.

Will suppliers and contractors be more willing to negotiate and deliver large-scale projects as smaller developments hit pause, whilst navigating growing interest rates and general financing challenges?

Considering all of the above, perhaps the ball is in the investor’s court.

EDNA BENAVIDES

INSIGHTS & ANALYTICS, GLEEDS EMEA