Germany’s fiscal expansion is becoming more visible in defense activity, construction and labor demand, according to UBS Global Wealth Management CIO Mark Haefele. He said the spending should support growth for the rest of this year and into next, and provide a domestic tailwind to corporate earnings.
Germany’s fiscal expansion is becoming more visible in defense activity, construction and labor demand, Haefele said. He pointed to a widening federal fiscal deficit as defense spending increased and revenues weakened, a jump in domestic orders including weapons, and public orders supporting road construction and civil engineering.
Investment spending slowed in the third quarter, and employment demand has not broadly recovered, Haefele noted. He expects fiscal disbursements to accelerate as ministries and regional governments use remaining allocations, supporting production and employment in exposed sectors, though he said issues could slow the pass-through.
Haefele said the improving outlook supports UBS Global Wealth Management’s constructive view on German equities, with the fiscal program providing a domestic tailwind to corporate earnings.
