Berenberg Bank: optimism regarding economic growth in Europe outstrips region's actual capacity

Donald Trump's trade policy has pushed Europe to take action. The countries of the region have started to implement large-scale plans aimed at boosting spending on defense and infrastructure renovation. Germany is in the lead in this process, investing hundreds of billions of euros in those areas.

Against this background, European companies are witnessing a spike in optimism. Economists are revising their forecasts and increasing their 2026 GDP growth expectations for the eurozone. However, while analyzing the situation, experts point out persisting problems.

Holger Schmieding of Berenberg Bank commented on the situation and noted the exaggeration of optimism. The risks of escalating trade tensions with the US pose a threat to the export-oriented economy of Europe. Business faces uncertainty and finds it difficult to plan investments.

Despite positive developments, existing problems need to be addressed. Klaus Adam from University College London emphasized the need to refine the Single Market. Companies are operating in the environment of bureaucratic barriers and high energy prices, and they can’t rely on financial injections only, the expert notes.