German investor confidence jumps in June amid upcoming surge in public spending

Bloomberg reports that investor confidence in Germany’s economy improved more than expected as an upcoming increase in government spending outweighs concerns about US tariffs.

The ZEW Economic Sentiment Index jumped to 47.5 in June, up from May’s 25.5. Analysts surveyed by Bloomberg had expected the index to rise to 35.

ZEW President Achim Wambach believes the result reflects growing confidence that the new German government’s fiscal policy can boost the economy. A surge in public spending along with the recent rate cuts by the European Central Bank could pull Germany out of stagnation, which has lasted for almost three years, he says.

A Bloomberg poll shows that Germany’s GDP is projected to rise 0.2%. The Bundesbank expects growth of 0.7% in 2026 and of 1.2% in 2027, mainly due to increased funding for defense and infrastructure.

Others are even more optimistic. The Munich Institute for Economic Research (Ifo) has raised its forecast for Germany’s GDP next year by 0.7 percentage points to 1.5%.