LIVE MARKETS-The healing nature of fiscal stimulus

ReutersAug 25, 2025 9:38 AM

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THE HEALING NATURE OF FISCAL STIMULUS

Germany's business morale improved to its highest level in 15 months, a survey showed on Monday, indicating that the country's huge fiscal spending plans are starting to boost sentiment.

The Ifo business climate index, which ING calls that country's most prominent leading indicator, rose for the eighth straight month to 89 in July, its highest since May of last year.

"In short, today's Ifo index shows remarkable optimism of German businesses in the healing nature of fiscal stimulus for the economy," writes Carsten Brzeski, global head of macro at ING.

The German economy still faces headwinds, having contracted 0.3% in the second quarter.

U.S. import tariffs are going to affect German exports and the euro EUR=EBS remains elevated, having risen 13% this year against the dollar.

"It is hard to see how the export-dependent German economy will be able to get out of seemingly never-ending stagnation in the second half of the year," Brzeski says.

"While we agree that eventually the government's spending plans for infrastructure and defence will lead to a surge in economic activity, there is still an increasing risk of underachieving," Brzeski adds.

(Samuel Indyk)

EARLIER LIVE MARKETS POSTS:

WEAK USD SELLING SIGNAL INTO MONTH-END - BARCLAYS CLICK HERE

STOXX DIPS, RENEWABLES DRAG CLICK HERE

EUROPE BEFORE THE BELL: GIVING BACK GAINS CLICK HERE

THE 'WHY' MATTERS FOR RALLIES, AND RATE CUTS CLICK HERE

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