Europe infrastructure buildout faces delays as TEN-T rail projects drive spending

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Europe infrastructure buildout delays

Highlights

Brenner Base Tunnel achieved a breakthrough milestone in July, advancing the 64km project as part of the EU’s multibillion-euro TEN-T infrastructure initiative.
European Commission allocated 77 per cent of a total €2.8 billion funding package to railway projects, with transport infrastructure expected to drive construction growth through 2035.
Combined estimated cost of eight flagship EU rail projects reached €66.5 billion in 2024, up 82 per cent since 2019, with average delays of 17 years and most set to miss 2030 deadlines.

Rail investment pipeline and project progress

As reported by Financial Times, the Brenner Base Tunnel reached a key construction milestone in July when workers broke through the final rock barrier between Austria and Italy, advancing a 64km underground rail corridor that is set to become the world’s longest underground railway.

The tunnel is part of the EU’s Trans-European Transport Network, or TEN-T, a multibillion-euro initiative launched decades ago to strengthen links across railways, roads and inland waterways. Fitch Solutions infrastructure analyst Laura Rebollo Mañueco says the vast majority of TEN-T mega-projects are going to EU-based firms, with her company reviewing more than 30 recent contracts and finding that only 27 per cent went to consortiums or joint ventures with at least one non-EU company, while only 3 per cent included a company based outside Europe.

In its latest transport infrastructure funding announcement, the European Commission allocated 77 per cent of a total 2.8 billion euros to railway projects. Rebollo Mañueco says rail remains a major focus for infrastructure spending in Europe over the coming years, with transport development expected to lead growth in the construction industry through 2035.

Other major schemes include Rail Baltica, a 1,230km high-speed line linking Poland and the Baltic states, the Fehmarnbelt Fixed Link between Denmark and Germany, and the Lyon-Turin rail link between France and Italy, which includes a 58km cross-border tunnel.

Costs, labor shortages and deadline pressure

EU officials and industry advisers say the projects are strategically important for mobility, the single market, competitiveness, defense and regional resilience. Annemie Turtelboom of the European Court of Auditors says those long-term benefits remain clear, even as delivery becomes more difficult for construction and engineering groups.

Rebollo Mañueco says the U.S.-Iran conflict has become a significant disrupter to the construction industry, with small and medium-sized companies especially exposed to higher prices and financing costs. Labor supply is also under strain, with the European Construction Industry Federation estimating in 2025 that the sector needs 2 million more workers by 2030.

Nicola Sandri, a senior partner at McKinsey who leads the firm’s infrastructure team, says labor availability and rising costs remain major constraints. By his estimates, construction records the highest job vacancy rate of any euro-area sector in the second quarter of the year at 3 per cent.

Those pressures are feeding delays and budget overruns. Turtelboom, lead auditor of a January report on EU infrastructure works, says the combined estimated cost of eight flagship projects, including the Brenner Base Tunnel and Rail Baltica, reaches 66.5 billion euros this year, up 82 per cent from 2019 estimates. The report finds Rail Baltica’s budget quadrupled from its 2017 estimate to 24 billion euros in 2024, while the projects face an average delay of 17 years, putting most of them on track to miss their 2030 completion deadline.

Turtelboom says some setbacks stem from factors outside project control, including the Covid pandemic and soaring energy and raw materials costs. She also points to diverging national priorities, weak engagement with local communities that leads to lengthy court procedures, differing tender systems and geological excavation difficulties, while Sandri says many of these issues are inherent to large multinational cross-border developments.

We recently wrote about Europe’s inflation-debt tradeoffs, as policymakers weigh price stability against long-term investment needs.

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