Germany, France Urge Stronger EU Response to Trump’s Tariffs: Bloomberg

German Investor Sentiment Jumps to Highest Level Since 2021

German investor confidence surged in January to its strongest level in more than two years, as optimism over the country’s economic outlook improved sharply, according to data released by the ZEW economic research institute on Tuesday.

The ZEW expectations index climbed to 59.6 points in January, far above market forecasts of 50.0 and up from 45.8 in December. The reading marks the highest level since August 2021.

Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank, said the rebound in sentiment was driven largely by the government’s new fiscal plans. Berlin has approved a major increase in public spending aimed at defence and infrastructure, in a bid to close long-standing investment gaps and pull the economy out of its downturn.

The ZEW institute also pointed to the EU’s trade agreement with the South American Mercosur bloc as a supportive factor, particularly for Germany’s export-heavy industries.

At the same time, perceptions of current economic conditions showed some improvement. The index for the present situation rose to minus 72.7 from minus 81.0 in December. While the gain helped offset recent deterioration in sentiment, Krueger cautioned that conditions on the ground remain weak.

Trade tensions, especially around global tariffs and geopolitical uncertainty, could still cloud the outlook despite the sharp rise in expectations.