European economic growth is poised to accelerate driven by heavy fiscal stimulus measures in Germany, according to a monthly survey of asset managers from BofA Securities. A record 74% of the 190 respondents said the impact of German fiscal stimulus policies has begun to show up in macroeconomic data, analysts noted in a Tuesday note.

Under Chancellor Friedrich Merz, Berlin has ramped up infrastructure and military spending, stepping back from longstanding fiscal tightness to address potential defense threats from Russia. Some 63% of European investors see German fiscal stimulus as the main catalyst for stronger regional growth, while just over a fifth view higher EU defense spending as a key driver. The survey also found that a plurality of roughly 45% project growth in the U.S. and China to "flatline" over the coming months.

Looking further out, expectations are more balanced, with 70% of respondents expecting stronger European growth over the next twelve months, while 57% see better global growth ahead. Taken together, German fiscal and EU defense spending are expected to allow Europe to "decouple from global growth and U.S. policy" changes. Against this backdrop, Germany continues to be the most preferred equity market in Europe, while France is "once again the most unloved."