Barclays Ups STOXX 600 Forecast Amid German Fiscal Reform

BENGALURU, India — Barclays raised its year-end target for Europe’s STOXX 600 index on March 19, predicting increased long-term growth in the region due to significant fiscal reforms by Germany.

The brokerage boosted its forecast for the index from 545 to 580 points, representing a 4.6% upside from the index’s last closing value. The revision follows Germany’s announcement of a massive spending initiative, which is expected to amount to approximately 500 billion euros ($546 billion), aimed at stimulating economic growth and enhancing military expenditure.

Germany’s parliament revealed the spending plan on Tuesday, marking a substantial shift away from decades of fiscal conservatism traditionally upheld by the country. Barclays anticipates this fiscal boost will have positive ripple effects for both Germany and the Eurozone through 2026 and beyond, despite potential near-term challenges posed by U.S. tariffs.

In their analysis, Barclays kept its earnings per share growth forecast for the STOXX 600 at 4% for 2025, while increasing its projections for 2026 to 8%, up from 4%. The firm does not foresee a recession in the U.S. and suggested that EU equities may perform better in the current environment, though they are not entirely insulated from growth-related concerns.

“Rising trade barriers and increasing policy uncertainty may be pushing investors to rebalance further away from U.S. equities toward Europe,” said a Barclays analyst. The firm’s insights come amidst escalating trade tensions, particularly after the European Union retaliated against broad U.S. tariffs on steel and aluminum.

Barclays’ optimistic outlook corresponds with broader market sentiments that European equities may become increasingly attractive as investors seek to mitigate risks associated with the volatility in U.S. trade policy.

Reporting by Joel Jose in Bengaluru; Editing by Mrigank Dhaniwala