Tobias Vogel, CEO of UBS Europe, predicts that strong wage growth and declining interest rates will enhance economic conditions across Europe.

He anticipates a total interest rate reduction of one percentage point by mid-2025 from the European Central Bank (ECB).

Experts forecast moderate growth in Europe for 2025, with stronger performance expected in Spain, the UK, and Switzerland, while Germany, France, and Italy may experience slower growth.

Most analysts project slight increases for the DAX and EuroStoxx 50 by the end of 2025, estimating the DAX at around 22,000 points and the EuroStoxx 50 at 5,300 points, translating to nearly 10% and over 8% increases, respectively.

DZ Bank offers more conservative estimates, projecting the DAX at 21,500 points and the EuroStoxx 50 at 5,200 points.

The DAX and EuroStoxx 50 indices have already gained over 40% and nearly 30%, respectively, since January 2023, indicating potential for modest growth in the upcoming year.

However, European stock markets may face challenges in 2025 after two strong years, with geopolitical and economic factors potentially hindering significant increases.

The implementation of Mario Draghi's competitiveness improvement agenda could lead to an annual investment boost of approximately 800 billion euros in Europe.

In contrast, China's economic recovery post-COVID-19 remains sluggish, although recent announcements of increased fiscal policies may stimulate growth.

In the United States, Donald Trump's 'America First' policy is expected to continue, which could introduce risks such as higher tariffs and trade restrictions, but may also bring benefits from tax cuts and deregulation.

Interestingly, potential tax cuts and deregulation in the U.S. could have a positive impact on European markets and companies.

In Germany, the upcoming early federal elections and discussions on reforming the debt brake will significantly influence the economic outlook, according to Robin Winkler, Chief Economist for Germany at Deutsche Bank.