{"id":15275,"date":"2025-12-28T10:05:15","date_gmt":"2025-12-28T10:05:15","guid":{"rendered":"https:\/\/borrowaccelerated.com\/?p=15275"},"modified":"2025-12-28T10:05:16","modified_gmt":"2025-12-28T10:05:16","slug":"europes-growth-prospects-depend-on-german-spending-spree-economists-say","status":"publish","type":"post","link":"https:\/\/borrowaccelerated.com\/?p=15275","title":{"rendered":"Europe\u2019s growth prospects depend on German spending spree, economists say"},"content":{"rendered":"
\n

Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a Financial Times survey.<\/p>\n

Yet the 88 economists polled are split over whether Berlin\u2019s fiscal push will deliver a \u201cEuropean renaissance\u201d or fade amid entrenched structural weaknesses and geopolitical uncertainty.<\/p>\n

With its largest economy stuck in recession since late 2022, Europe needed a return of \u201canimal spirits\u201d to power a recovery driven by domestic demand, said Nick Kounis, chief economist at ABN Amro. <\/p>\n

Eurozone growth is expected to slow by 0.2 percentage points next year to 1.2 per cent in 2026, before picking up to 1.4 per cent in 2027, according to the FT survey. The forecast broadly matches the European Central Bank\u2019s latest staff projections.<\/p>\n

Last year\u2019s prediction of 0.9 per cent growth for 2025 proved too downbeat, after the bloc\u2019s economy expanded by 1.4 per cent. Concerns voiced by economists in last year\u2019s FT poll that the ECB had been too slow to cut rates now appear misplaced. \u201cOverall we have been positively surprised about growth resilience in 2025,\u201d said Pia Fromlet, an economist at SEB.<\/p>\n

But economists were unsure \u201cwhether the fiscal impulse can translate into durable domestic momentum rather than merely cushioning external shocks\u201d, said L\u00e9a Dauphas, chief economist at TAC Economics. TD Securities analyst James Rossiter predicts a \u201ctug of war\u201d between geopolitical uncertainty and expansive fiscal policy.<\/p>\n

Optimists expect that underlying resilience will be reinforced by fiscal stimulus next year. Jan von Gerich, chief strategist at Nordea and among the most bullish respondents with a 2026 growth forecast of 1.5 per cent, said \u201cprivate consumption has a lot of potential to surprise to the upside\u201d.<\/p>\n

Reijo Heiskanen, chief economist at Finnish lender OP Pohjola, is even more sanguine, predicting a \u201ccomeback of [Europe\u2019s] North\u201d.<\/p>\n

<\/picture>
Workers at a car plant in China. The EU and individual governments are pursuing a \u2018too-little-too-late approach\u2019 to deal with an intensifying\u00a0\u2018China shock\u2019, an economist says<\/span> \u00a9 Jing Xuan Teng\/AFP\/Getty Images<\/span><\/figcaption><\/figure>\n

While views on growth are split, there is broad consensus that the ECB has brought inflation back under control. A large majority of economists expect it to meet its medium-term 2 per cent target in 2027, after undershooting slightly at 1.9 per cent in 2026.<\/p>\n

Three-quarters of respondents expect the ECB to keep its key deposit facility rate unchanged at 2 per cent through the end of 2026. By the end of 2027, economists on average foresee a single rate rise to 2.25 per cent. <\/p>\n

Looking ahead, growth would \u201chinge less on monetary policy and more on fiscal execution, confidence and progress on structural reforms\u201d, said Sabrina Khanniche, an economist at Pictet Asset Management.<\/p>\n

But not everyone is convinced that Berlin can deliver. \u201cIncreased government spending will mechanically lift German growth, but the key question is whether or not it translates into a broader recovery,\u201d said Henry Cook, an economist at MUFG Bank.<\/p>\n

Sceptics warn that billions of euros in new borrowing could end up funding welfare and other current spending rather than fresh investment, while the money allocated to defence might have only a limited impact on growth.<\/p>\n

\u201cThe optimism that greeted Friedrich Merz\u2019s announcement earlier this year has faded in recent months,\u201d said Ben Blanchard, an analyst at Absolute Strategy Research.<\/p>\n

\u201cAnyone expecting a significant bounce in Germany\u2019s economic fortunes in 2026 is likely to be disappointed,\u201d warned Aberdeen economist Felix Feather.<\/p>\n

At the same time, large parts of Europe\u2019s industrial base are under mounting pressure from US President Donald Trump\u2019s 15 per cent tariff rate and intensifying competition from Chinese rivals, leaving consumers rattled and reluctant to spend. <\/p>\n

While US tariffs \u201cso far have not had a meaningful negative impact on Eurozone growth\u201d, said HSBC euro area economist Fabio Balboni, \u201cwe might only have seen the tip of the iceberg\u201d. A narrow majority of poll respondents believe that more than half of the overall negative impact from the tariffs has already materialised.<\/p>\n

Apolline Menut, economist at French asset manager Carmignac, warned about the fierce competition from Chinese exporters threatening to \u201cfurther hollow out\u201d EU industry. The bloc as a whole and individual governments were pursuing a \u201ctoo-little-too-late approach\u201d to deal with an intensifying\u00a0\u201cChina shock\u201d, she said.<\/p>\n

A bursting of what some economists describe as an \u201cAI bubble\u201d in American equity markets could also weigh on Europe\u2019s growth. \u201cA sharp correction in US tech valuations remains the biggest global risk,\u201d warned Christian Schulz, chief economist at Allianz Global Investors. <\/p>\n

Steep falls in US equities and the dollar would \u201creverberate also through Europe\u201d, potentially pushing up borrowing costs for governments and companies. <\/p>\n

\u201cThe risk of a financial crisis of some sort that spills over into the US economy and the financial sectors and economies of other countries is high and rising,\u201d said John Llewellyn, former OECD chief economist and partner at advisory firm Independent Economics.\u00a0<\/p>\n

But some economists sketch more optimistic scenarios, including an end to the war in Ukraine \u2014 or at least a durable ceasefire. If a peace deal were \u201ccredible and not unfavourable to Ukraine\u201d, it could \u201csignificantly reduce geopolitical uncertainty and improve confidence\u201d, argued Christophe Boucher, chief investment officer at ABN AMRO Investment Solutions.<\/p>\n

In that scenario, energy prices could fall while investment and exports rise. Combined with fiscal stimulus from government spending programmes and a potential reversal of households\u2019 high saving rates, this could even trigger a \u201cvirtuous cycle\u201d and a \u201cEuropean renaissance\u201d, said Reinhard Cluse, an economist at UBS.<\/p>\n

Additional reporting by Alexander Vladkov in Frankfurt<\/em><\/p>\n

.\u00a0<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according…<\/p>\n","protected":false},"author":1,"featured_media":15276,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-15275","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nEurope\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated<\/title>\n<meta name=\"description\" content=\"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/borrowaccelerated.com\/?p=15275\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Europe\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated\" \/>\n<meta property=\"og:description\" content=\"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a\" \/>\n<meta property=\"og:url\" content=\"https:\/\/borrowaccelerated.com\/?p=15275\" \/>\n<meta property=\"og:site_name\" content=\"Borrow Accelerated\" \/>\n<meta property=\"article:published_time\" content=\"2025-12-28T10:05:15+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-12-28T10:05:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2025\/12\/https3A2F2Fd1e00ek4ebabms.cloudfront.net2Fproduction2Fab54e021-5ff7-4ba0-a4ec-922c76d43df2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"700\" \/>\n\t<meta property=\"og:image:height\" content=\"394\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Press Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Press Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275#article\",\"isPartOf\":{\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275\"},\"author\":{\"name\":\"Press Room\",\"@id\":\"https:\/\/borrowaccelerated.com\/#\/schema\/person\/2a1a980ef2ecf845cc4c153d880d7fc7\"},\"headline\":\"Europe\u2019s growth prospects depend on German spending spree, economists say\",\"datePublished\":\"2025-12-28T10:05:15+00:00\",\"dateModified\":\"2025-12-28T10:05:16+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275\"},\"wordCount\":925,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/borrowaccelerated.com\/#organization\"},\"articleSection\":[\"Business\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/borrowaccelerated.com\/?p=15275#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275\",\"url\":\"https:\/\/borrowaccelerated.com\/?p=15275\",\"name\":\"Europe\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated\",\"isPartOf\":{\"@id\":\"https:\/\/borrowaccelerated.com\/#website\"},\"datePublished\":\"2025-12-28T10:05:15+00:00\",\"dateModified\":\"2025-12-28T10:05:16+00:00\",\"description\":\"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a\",\"breadcrumb\":{\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/borrowaccelerated.com\/?p=15275\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/borrowaccelerated.com\/?p=15275#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/borrowaccelerated.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Europe\u2019s growth prospects depend on German spending spree, economists say\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/borrowaccelerated.com\/#website\",\"url\":\"https:\/\/borrowaccelerated.com\/\",\"name\":\"Fintech Advance\",\"description\":\"Latest Finance and Tech News and Updates\",\"publisher\":{\"@id\":\"https:\/\/borrowaccelerated.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/borrowaccelerated.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/borrowaccelerated.com\/#organization\",\"name\":\"Fintech Advance\",\"url\":\"https:\/\/borrowaccelerated.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/borrowaccelerated.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/tech-logo.png\",\"contentUrl\":\"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/tech-logo.png\",\"width\":409,\"height\":70,\"caption\":\"Fintech Advance\"},\"image\":{\"@id\":\"https:\/\/borrowaccelerated.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/borrowaccelerated.com\/#\/schema\/person\/2a1a980ef2ecf845cc4c153d880d7fc7\",\"name\":\"Press Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/borrowaccelerated.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png\",\"contentUrl\":\"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png\",\"caption\":\"Press Room\"},\"sameAs\":[\"https:\/\/borrowaccelerated.com\"],\"url\":\"https:\/\/borrowaccelerated.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Europe\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated","description":"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/borrowaccelerated.com\/?p=15275","og_locale":"en_US","og_type":"article","og_title":"Europe\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated","og_description":"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a","og_url":"https:\/\/borrowaccelerated.com\/?p=15275","og_site_name":"Borrow Accelerated","article_published_time":"2025-12-28T10:05:15+00:00","article_modified_time":"2025-12-28T10:05:16+00:00","og_image":[{"width":700,"height":394,"url":"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2025\/12\/https3A2F2Fd1e00ek4ebabms.cloudfront.net2Fproduction2Fab54e021-5ff7-4ba0-a4ec-922c76d43df2.jpg","type":"image\/jpeg"}],"author":"Press Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Press Room","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/borrowaccelerated.com\/?p=15275#article","isPartOf":{"@id":"https:\/\/borrowaccelerated.com\/?p=15275"},"author":{"name":"Press Room","@id":"https:\/\/borrowaccelerated.com\/#\/schema\/person\/2a1a980ef2ecf845cc4c153d880d7fc7"},"headline":"Europe\u2019s growth prospects depend on German spending spree, economists say","datePublished":"2025-12-28T10:05:15+00:00","dateModified":"2025-12-28T10:05:16+00:00","mainEntityOfPage":{"@id":"https:\/\/borrowaccelerated.com\/?p=15275"},"wordCount":925,"commentCount":0,"publisher":{"@id":"https:\/\/borrowaccelerated.com\/#organization"},"articleSection":["Business"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/borrowaccelerated.com\/?p=15275#respond"]}]},{"@type":"WebPage","@id":"https:\/\/borrowaccelerated.com\/?p=15275","url":"https:\/\/borrowaccelerated.com\/?p=15275","name":"Europe\u2019s growth prospects depend on German spending spree, economists say | Borrow Accelerated","isPartOf":{"@id":"https:\/\/borrowaccelerated.com\/#website"},"datePublished":"2025-12-28T10:05:15+00:00","dateModified":"2025-12-28T10:05:16+00:00","description":"Europe\u2019s hopes of a return to growth in 2026 rest largely on Germany\u2019s \u20ac1tn debt-funded spending drive on infrastructure and defence, according to a","breadcrumb":{"@id":"https:\/\/borrowaccelerated.com\/?p=15275#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/borrowaccelerated.com\/?p=15275"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/borrowaccelerated.com\/?p=15275#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/borrowaccelerated.com\/"},{"@type":"ListItem","position":2,"name":"Europe\u2019s growth prospects depend on German spending spree, economists say"}]},{"@type":"WebSite","@id":"https:\/\/borrowaccelerated.com\/#website","url":"https:\/\/borrowaccelerated.com\/","name":"Fintech Advance","description":"Latest Finance and Tech News and Updates","publisher":{"@id":"https:\/\/borrowaccelerated.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/borrowaccelerated.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/borrowaccelerated.com\/#organization","name":"Fintech Advance","url":"https:\/\/borrowaccelerated.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/borrowaccelerated.com\/#\/schema\/logo\/image\/","url":"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/tech-logo.png","contentUrl":"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/tech-logo.png","width":409,"height":70,"caption":"Fintech Advance"},"image":{"@id":"https:\/\/borrowaccelerated.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/borrowaccelerated.com\/#\/schema\/person\/2a1a980ef2ecf845cc4c153d880d7fc7","name":"Press Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/borrowaccelerated.com\/#\/schema\/person\/image\/","url":"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png","contentUrl":"https:\/\/borrowaccelerated.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png","caption":"Press Room"},"sameAs":["https:\/\/borrowaccelerated.com"],"url":"https:\/\/borrowaccelerated.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/posts\/15275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15275"}],"version-history":[{"count":1,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/posts\/15275\/revisions"}],"predecessor-version":[{"id":15277,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/posts\/15275\/revisions\/15277"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=\/wp\/v2\/media\/15276"}],"wp:attachment":[{"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15275"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15275"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/borrowaccelerated.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}