“President Trump’s approach to trade and global alliances may be a wake up call for Europe. The region is signalling a clear and a historical shift, which will require target measures to boost growth efficiently.”
- Optimism around fiscal spending plans in Germany and in Europe has boosted the region’s stocks.
- If implemented well to boost productivity and improve efficiencies across Europe, the plans may be positive for long-term growth. .
- Overall, short-term volatility could rise amid new tariffs in particular on the auto sector.
German equities, and more broadly European indices, have outperformed the main global benchmarks so far this year on the back of changing attitudes towards fiscal austerity in the region. The reform of the ‘constitutional debt brake’ in Germany is paving way for hundred of billions of euros worth of spending on defence and infrastructure. In addition, the European commission has proposed to give additional room to EU countries to spend more on defence and also gave suggestions for joint debt for this purpose. While markets have rightly welcomed this, the most important factors are how these proposals/plans are implemented to improve productivity so that the benefits percolate down to the real economy.
You can now read the full whitepaper at the link below
