European Investor Confidence Rises Amid Inflation concerns and German Stimulus

LONDON – A recent survey of fund managers reveals a growing optimism regarding European economic prospects, despite persistent global economic uncertainties and inflationary pressures.The findings, released today, indicate a shift in sentiment driven largely by expectations of stronger growth in the Eurozone and a potential easing of monetary policy by the European Central Bank (ECB).

the survey, conducted among 250 fund managers with combined assets under management exceeding $500 billion, shows that 48 per cent anticipate stronger European growth over the coming year.This represents a 12 per cent increase from a similar survey conducted in Q1 2025. The optimism is partially fueled by Germany‘s recently announced €30 billion fiscal stimulus package, aimed at revitalizing its economy, which has been struggling with near-stagnation sence late 2024.

Furthermore, 23 per cent of respondents foresee a decline in European inflation over the next 12 months. While inflation remains above the ECB’s 2 per cent target, the expectation of a downward trend is bolstering market confidence.The ECB, led by President Christine Lagarde, is widely expected to begin a series of incremental interest rate cuts starting in Q2 2026, contingent on sustained progress in curbing inflation.

Germany’s stimulus, spearheaded by Finance Minister Christian Lindner, focuses on infrastructure investments in renewable energy, digital infrastructure, and support for small and medium-sized enterprises (SMEs). Investors believe this targeted approach will yield the most notable impact on the German and broader European economies.

Conversely, Switzerland’s investment appeal has diminished following the imposition of a 39 per cent tariff on Swiss goods by the united States in July 2025, a move initiated by former President Donald Trump following trade disputes over dairy and pharmaceutical exports. This tariff has led to a 15 per cent decrease in foreign investment in Swiss equities since its implementation.

Over 10 per cent of fund managers believe that easing by the european Central Bank will be a key driver of European growth, lowering borrowing costs for businesses and increasing capital availability for banks like Deutsche Bank and BNP Paribas.

Long-Term Bullish Outlook

despite short-term skepticism regarding potential tariff shocks and geopolitical risks, a considerable majority – 89 per cent – of fund managers express long-term optimism regarding European equities. The financial sector, notably insurance companies like Allianz and AXA, is projected to be the top-performing sector, followed closely by the insurance industry.

However, the automotive and retail sectors are anticipated to underperform, facing challenges from the transition to electric vehicles and shifting consumer spending patterns. Specifically, analysts at Goldman Sachs predict a 5 per cent decline in automotive sector revenues over the next three years.