Germany Fiscal Stimulus Tracker Update and Sector Views

UBS provides an update on the German fiscal stimulus tracker, noting high momentum in defense spending and slower progress in infrastructure. They forecast a 60bp GDP boost from these measures in both 2026 and 2027.

Key Takeaways

• 1.German fiscal stimulus in defense and infrastructure is expected to boost GDP growth by ~60bp in 2026 and 2027 each.
• 2.Defense spending momentum is very strong with orders near historical highs, whereas infrastructure progress is lagging.
• 3.UBS raised its German budget deficit projections by 50bp for 2026 and 2027 to 3.8% and 4.3%, respectively.

Table of Contents

• Fiscal stimulus tracker and sector views updated through April
• Government budget plans: Determined to spend more...
• and we raise our budget deficit projections
• Defence-related macro variables: Orders remain close to historical highs
• Infrastructure-related macro variables: Slow, with a worrying decline in confidence
• Sector views: Defence
• Sector views: Capital goods
• Sector views: Construction/building materials
• Sector views: Construction/civil engineering - Implenia
• Sector views: Real estate
• Tracking stimulus – from budget outlays to production
• To recap: Our macro assumptions
• Valuation Method and Risk Statement

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