Europe Poised for Economic Rebound

Europe is set for a cyclical economic rebound as macroeconomic indicators suggest stabilization, and the European Central Bank adopts a more accommodative stance. Germany's massive EUR 500 billion infrastructure initiative and increased defense spending, alongside a EUR 800 billion EU modernization and security plan, are propelling growth. Economists predict a sharp upturn in economic activity, with JP Morgan forecasting a 1% economic expansion by mid-2026, accelerating to 2% by year-end.

This environment favors European small and mid-cap companies, which generate most of their sales within Europe. Historically challenged by energy price shocks and capital outflows, these companies are now seeing investment capital returning. The EU's shift towards creating pan-European business champions augurs well for cross-border consolidation, particularly in the media and manufacturing sectors.

Electrification serves as a long-term growth driver, with projects waiting across Europe. Small and mid-cap specialists are crucial in this transformation. With a favorable valuation context, these companies are well-positioned for Europe's growth.