German spending plans cheer investors: survey

FRANKFURT: German investor sentiment posted its biggest rise in over two years in March, fuelled by chancellor-in-waiting Friedrich Merz’s proposals to boost defence and infrastructure spending, a survey showed on Tuesday.

Market expectations for Europe’s biggest economy over the next six months almost doubled, rising 25.6 points to 51.6 points, according to the ZEW institute’s closely-watched survey.

That was the biggest rise since January 2023, and better than a figure of 45 predicted by analysts surveyed by financial data firm FactSet.

ZEW President Achim Wambach said the markedly “brighter mood” was likely down to Merz’s plans, as well as a eurozone interest rate cut earlier this month, the sixth since June of last year.

March’s rise also follows a big increase in February, when sentiment was boosted by the prospect of a change in the German government that investors hoped could be a catalyst for an economic upturn.

Merz’s plans, which face a parliamentary vote on Tuesday, envisage loosening strict debt limits when it comes to defence spending as well as establishing a 500-billion-euro (545-billion) fund for infrastructure investment.

The conservative leader’s CDU/CSU bloc came first in elections last month and is in talks to form a coalition with the centre-left SPD.