On the horizon — what lies beyond 2022 for western Europe?

As the end of the year approaches and the energy crisis continues to impact pricing in the industrial and consumer markets, European Union member states are constantly monitoring the situation and proposing possible solutions to ease the burden in their region.

Luis de Guindos, Vice-President of the European Central Bank, recently speculated that overall inflation was nearing its peak and an anticipated decline would take place during the first half of 2023. (Euro area inflation likely near its peak, ECB's De Guindos says | Reuters). Spain is currently the only country in this snapshot report that has started to see declining inflation figures.

France and Spain were quick to pass measures designed to reduce energy bills in September and October, respectively. Germany, Italy and Portugal presented proposals expected to be approved and instated in early 2023. The goal is to reduce energy costs in both gas and electricity to contain price increases across all industries, especially food production. These measures will benefit the construction industry both directly and indirectly as production factories were choosing to close factory lines to save on operating hours and energy consumption. General contractors will also see their overhead costs reduced as they brace for declining demand.

The European Union construction survey has shown that contractors are nervous leading into the final quarter with generally reduced employment expectations, except Spain which saw an uptick in optimism as work continues. Now, more than ever, NextGeneration EU plans designed around heavy investments in digitisation will keep speciality contractors busy, as well as in years to come. Data centre construction is expected to expand as 5G internet connectivity is made available in outdated or previously excluded areas.

While a cloud remains over Europe as construction tender prices stay elevated, real estate developers might find that this is an optimal time to begin planning and designing around communities soon to be infused with NextGeneration EU spending and infrastructure improvements.

Will you be ready for when the clouds start to clear in 2023?