Road to Renewal: Investing in a New Era for Europe

Goldman Sachs

Hania Schmidt, Maarten Geerdink, Simona Gambarini

Research

19 Pages

Goldman Sachs Asset Management outlines how Europe’s expansive fiscal and defense initiatives are reshaping its investment landscape. Despite challenges like tariff headwinds and dependencies on external resources, the firm sees significant opportunities in sectors poised for reindustrialization. The report emphasizes Europe’s potential as an alpha-rich environment, particularly for active investors leveraging data-driven strategies.

Key Takeaways

Defense spending surge: Euro area defense budgets are projected to rise from 1.9% of GDP in 2024 to 2.8% by 2027, potentially reaching 3%, signaling substantial investment in military and related sectors.
Reindustrialization opportunities: Sectors like industrials, energy, and infrastructure stand to benefit from Europe's fiscal ambitions, provided implementation challenges are managed effectively.
Active investment advantage: Market inefficiencies and unique return dynamics in European equities present favorable conditions for active, data-informed investment approaches.
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