Financial Insights That Matter
Germany’s historic shift on fiscal expansion is set to reshape Europe’s economic landscape, unlocking a wave of public spending that could boost growth across the eurozone.
With hundreds of billions of euros expected to flow into defence, infrastructure, and energy, investors are eyeing key stocks poised to benefit.
Goldman Sachs analysts have identified 12 buy-rated European companies outside the defence sector that could ride this spending boom, spanning industries from airport operations to renewable energy.
Germany’s government-in-waiting is setting the stage for a historic departure from its traditionally conservative fiscal approach.
The CDU/CSU and SPD-led coalition unveiled a €500 billion off-budget infrastructure fund—equivalent to 11.6% of GDP in 2024—to be deployed over the next ten years. This fund aims to revamp the country’s ageing infrastructure, accelerate the energy transition, and boost housing and transport investments.
In a further break from its traditionally strict fiscal orthodoxy, the government will exempt defence spending exceeding 1% of GDP from the constitutional debt brake—a rule that limits new borrowing—effectively unlocking an additional €11 billion per year for military upgrades.
Additionally, Germany will ease fiscal constraints on its regional states, raising the structural deficit allowance from 0.0% to 0.35% of GDP.
Goldman Sachs economists have raised their German GDP growth forecasts for this year and 2026, citing stronger fiscal stimulus. This revision also prompted an upgrade to eurozone growth projections, with the European Central Bank’s (ECB) terminal interest rate forecast now set at 2%.
By contrast, US growth forecasts have been downgraded, weighed down by rising tariffs and weaker-than-expected expansion under President Donald Trump.
“There has been a material repricing of reflation risk in Europe versus the US across assets,” said Christian Mueller-Glissmann, CFA, at Goldman Sachs.
Amid this evolving economic landscape, Goldman Sachs has identified 12 Buy-rated European stocks—outside the defence sector—that stand to benefit from the anticipated spending boom.
These companies span industries ranging from construction and logistics to energy and real estate, making them key players in Germany’s economic revolution.
Eiffage – The French construction giant is well-positioned to gain from increased defence-related projects in both France and Germany. The company has already secured a €7 billion building renovation contract for the French Armed Forces, with further potential for its defence-focused Clemessy subsidiary.
#1a73e8;">Boost Your Financial Knowledge and Achieve Stability
Discover a growing online community dedicated to delivering financial news, tips, and strategies designed to help you manage money effectively, save smarter, and grow your investments with confidence.
#1a73e8;">Top Financial Tips for Saving and Investing
- Personal Finance Management: Master the art of budgeting, expense tracking, and building a strong financial foundation.
- Investment Opportunities: Stay updated on market trends, learn about stocks, and explore secure ways to grow your wealth.
- Expert Money-Saving Advice: Access proven techniques to reduce expenses and maximize your financial potential.