Keypoints
- Europe has announced an accelerated plan of action to strengthen EU security & defence policy
- ReArm Europe and the German fiscal shift will support growth but we expect the trade war will mitigate their economic impact
- We are positive on German equities benefitting from fiscal stimulus and on European duration
The urgency to increase EU defence
Released last September, former Mario Draghi’s report[1] urged the EU to revive and boost its competitiveness. At the end of January, the European Commission presented the Competitiveness Compass to allow Europe to revive economic growth and secure prosperity. The report has the following objectives:
- Close the innovation gap with the main competitors
- Link decarbonisation and competitiveness
- Increase resilience in supply chains and enhance cooperation between member states in defence
Uncertain about the US commitment to offer security for Europe, European leaders have recently announced a series of measures aimed at enhancing their own defence capabilities.
