Construction projects warn that rising prices will also affect the EU system
Construction officials from all over Europe have warned that rising prices are “dangerous” and a shortage of more construction materials could jeopardize the EU’s 800bn economic growth program.
The EU construction sector makes up about 10% of the bloc’s capital and major projects make up the bulk of the Brussels fund, which distributes funds and loans to rebuilding the wealth of member states after the Covid-19 epidemic.
But prices for building materials from steel and wood to concrete and copper have risen sharply in recent weeks as economic growth in Europe and elsewhere – including the US and China – triggers domestic growth.
According to the European Construction Industry Federation (FIEC), tariff prices have risen by 15% in just three months, cement prices have risen by 10% in one month and prices have risen by more than 20%.
Construction projects often pay builders for delays, while contractors often have high prices.
Domenico Campogrande, director-general of the FIEC, has warned that rising prices and further delays put the EU’s financial risk at risk.
“The danger is that we have a huge repatriation plan in the EU but if 30 to 40% of this money is combined with other high-cost equipment, it could be worthless because it would not allow real wealth,” he said.
Mu a recent letter at the European Commission, the FIEC also mentioned an “alarm” on rising prices and declining arms embargoes, including double the price of Italian steel for concrete for four months until March.
“These developments are jeopardizing the construction industry’s economic recovery and threaten the viability of European programs,” he said.
In Italy – the largest beneficiaries of Brussels funding – the government plans to spend more than 100bn of its EU funding on construction over the next five years. But the construction industry has warned officials that it will not be able to handle the situation without major changes.
“We are facing a shortage of building materials and this is dangerous because Italy is hitting more than the rest of Europe,” said Flavio Monosilio, director general of the ANCE, an Italian construction company. “This crisis is at the core of the new EU sentiment.”
Construction supervisors blame a number of factors on the barriers, including the amount of temporary search that has passed availability of equipment in many countries, as well as the epidemic disruption to supply chains and continue trade disputes.
Other tools have been affected by other problems such as the spread of the virus that causes wood production, and delays the distribution of unused metal.
Thomas Birtel, chief of the Austrian construction company Strabag, said inflation “has risen sharply in the past two weeks” and the company had to “report the delay in construction because the materials are not available”.
Strabag, which built the Copenhagen Metro in Denmark and the Limerick Tunnel in Ireland, has its own concrete and bitumen machinery, but Birtel said: “Construction work is a small business and it is impossible to improve the supply chain.”
In Germany, 44% of construction companies surveyed by the Ifo Institute in May also reported difficulty finding items on time, up from less than 6% in March.
“We haven’t seen a barrier since 1991,” Felix Leiss told Ifo. “This seems to have led to a reduction in construction in April, perhaps for a while.”
Production in German construction companies fell by 4.3% in April since last month, although the former companies said they had not returned to 62bn in March.
“Many manufacturers fail to deliver the product in less than a year and this is a serious problem,” said Stephan Rabe of a German business group. “Most of the money is spent on government and state construction projects in the US and China and this is absorbing a lot of resources. Wood timber is manufactured in Germany and exported to the US, then it is in short supply here. ”
Some German politicians have called on Berlin to ask the EU for foreign and other foreign weapons.
As the US government plans to launch $ 1.7tn construction and global economic growth is expected find directions, the challenges are expected to remain major in the coming months.
“It will take time to get back to normal – by the end of the year,” Campogrande said.
Some countries, such as France and Germany, have responded by lowering restrictions on certain building codes, reducing delays, and reimbursing contractors at higher prices.
Monosilio said Rome would continue to provide any assistance to the project, which has been plagued by a decade-long collapse of investment, a lack of funds in banks and temporary delays in the approval and payment of the project.
Italian Prime Minister Mario Draghi says “where the world is going” depends on the success of a A package of € 248bn finances and reforms are mainly funded by the EU’s Recovery and Resilience Plan. It also includes the sale of high-speed railways, power stations, smart grids and power houses.
EU countries have no history of revenue sharing; in the six years to 2020, they only spent less than half of the money they were given by Brussels.
With no change to address the construction crisis in Italy, Monosilio said similar challenges could cause the EU to spend more money.
“The Draghi government really wants to address this issue,” he said. “[But] and the Damocles sword that hangs over all of Europe. ”