Europe: leader or laggard?

November 2025

After many years of trailing the US, European equities have experienced a strong resurgence in 2025 outperforming many global peers.

Optimism has largely been driven by expansionary fiscal policy in countries like Germany, and by rate cuts from the European Central Bank (“ECB”) on generally easing inflation. Despite the equity market optimism and a relatively resilient real economy, questions related to tariffs persist, growth across economies is uneven, and geopolitical tensions particularly in Ukraine linger. Also, a significant part of the recent equity market gains for US investors has been related to a weakening US dollar.

In this paper, we explore emerging positive trends in Europe and highlight potential economic and financial challenges ahead.