{
  "id": 3920179,
  "title": "Is Germany now the better bet than France in European equities?",
  "url": "https://urgent.news/2026/08/28/is-germany-now-the-better-bet-than-france-in-european-equities",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-28T08:02:50.000Z",
  "source": {
    "name": "Investing.com",
    "slug": "investing-com",
    "url": "https://www.investing.com/news/stock-market-news/is-germany-now-the-better-bet-than-france-in-european-equities-4880682"
  },
  "original_language": "en",
  "account": "Barclays has deemed Germany a more attractive choice than France for European equities, as French bonds and stocks face increased uncertainty due to a looming budget showdown and the 2027 presidential election. Emmanuel Makonga and his team of strategists highlighted that France is in for a period of fiscal and political instability, with budget negotiations, credit rating reviews, and the presidential race likely to keep investors on edge. The deficit is projected to stay above 5% of GDP, and the national debt is expected to surpass 120%.\n\nThe strategists pointed out that polling continues to show support for the political extremes, with far-right leader Marine Le Pen leading the polls, followed by far-left leader Jean-Luc Mélenchon. A victory for one of these candidates would introduce additional uncertainty to an already precarious fiscal situation.\n\nBarclays' rates strategists anticipate OAT-Bund spreads of 60-65 basis points if a favorable scenario unfolds, which includes ending the Gulf conflict, smooth autumn budget talks, and a centrist candidate performing well in polls. However, if budget talks become contentious, the spread could widen to 95-100 basis points, although an outcome above 100 basis points is considered unlikely before the end of the year.\n\nThe fiscal risk is also contributing to earnings risk, with Barclays estimating that an extension of France's temporary corporate tax surcharge could reduce full-year 2027 earnings per share growth by about 8 percentage points, from 12.2% to 4.4%. The French Economy Minister has already confirmed the surcharge extension.\n\nDespite the pressure, French equities have largely priced in much of the negative news, with outflows significantly exceeding those of other major EU markets and valuations being more discounted compared to their peers. However, weak positioning alone is unlikely to result in a sustained reversal while fiscal and political turmoil persists.\n\nIn contrast, Barclays noted a positive trend in Germany, driven by stronger Purchasing Managers' Index (PMI) and Ifo data, as well as enhanced fiscal flexibility. The bank's German Revival basket has underperformed due to lingering doubts about reform implementation. Although Germany faces risks like potential gas price hikes heading into winter and the upcoming Saxony-Anhalt election, they are unlikely to disrupt the federal fiscal agenda.\n\nOverall, with a stronger fiscal position compared to most EU/DM competitors, rising growth momentum, and still reasonable valuations, Germany appears to be in a better position than France within European equities, according to Barclays.",
  "summary": null,
  "key_points": [
    "Barclays considers Germany more attractive than France for European equities",
    "French bonds and stocks face uncertainty due to budget showdown and presidential election",
    "Germany's fiscal position is stronger compared to most EU/DM competitors"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}