European Recovery Plan provides €200 bln. response to crisis in construction sector (EU)

Under the European Recovery Plan, member states have committed to a co-ordinated stimulus package representing 1% of the EU-27 GDP (€200 billion). The plan will contribute to the short-term efforts, while at the same time tackling long-term structural reforms, including investment in research and development, innovation, training, infrastructure, the green economy, etc.

On the national level, the European Commission has received around 800 recovery measures since April 2009. Around 140 of these measures concern the construction sector. The majority relate to infrastructure (55%), 30% to energy efficiency of buildings, while the rest is dedicated to the financing of social housing, training, fiscal reductions and preferential loans. In regards to the energy efficiency of buildings, the measures vary, often based on a mixture of fiscal aides, soft loans and grants. Some of them target in particular low-income households. In a number of member states simplification of administrative procedures has also been initiated to achieve a better targeted and speedier deployment of European structural funds.

As a whole, member states have taken many measures of varying types to support the construction sector, but some uncertainty remains about the calendar and the financial envelope of the measures. It will therefore be difficult to assess the true impact of these measures on the demand, supply, innovation and supply chain renewal/strengthening.

Member states that have committed funds to projects to improve energy efficiency in new or renovation construction include Ireland, Germany, the United Kingdom, Spain, the Netherlands and the Czech Republic.

Ireland has provided re-training opportunities for construction workers in emerging areas such as the installation of energy-efficient and renewable technologies and has launched a programme giving accelerated capital allowances for energy-efficient equipment. Germany has increased funds of €3 billion (2009-2011) for energy-efficient refurbishment of schools, nurseries, sports facilities and other social infrastructures and large residential estates.

The United Kingdom has added £75 million for "Warm Front", a program for insulation and heating improvements in vulnerable households, and has installed 300,000 m² of solar panels and 12,500 micro-generation units (mini-wind turbines) this year. In Spain, Plan Renove Vivienda offers subsidies for the rehabilitation of existing housing and buildings focused on energy efficiency (400,000 subsidies) and accessibility (100,000 subsidies), as well as subsidies for high-energy performance new houses.

The Czech Republic has promised €240 million for PANEL programme for the refurbishment of high-rise panel buildings in state property and has used EU funds to co-finance projects aimed at improving the environment in an amount of CZK 500 million (in the context of the Financial Perspective from 2004-2006).

Other member states, including France, Sweden and Finland, have offered tax incentives related to energy-efficient construction.

France has introduced eco-prêt à taux zéro, which gives 0% interest rate loans up to €30,000 per dwelling for new construction or renovation matching technical requirements, and eco-prêt logement social, which gives preferential interest rates for energy retrofitting of 100,000 social housing units (2009-2010). They have also given an income tax credit for works aimed at improving energy efficiency of the dwelling.

Sweden offers a tax deduction for maintenance and renovation in single-family houses and condominiums. Finland gives tax credit for maintenance, repair and improvement and a fixed-term grant for renovation.

Other member states have used other measures to stimulate construction and energy efficiency. Denmark has raised annual savings in final energy demand through collaboration with energy suppliers. Hungary has introduced legislation to decrease VAT on construction from 20% to 5% and is working on simplifying construction regulation to accelerate projects of national importance.

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