Summary of Key Points from the Conference Call Industry Overview - The focus is on the **German economy** and its fiscal policies, particularly in light of the proposed fiscal package by the CDU/CSU and SPD parties. Core Insights and Arguments 1. **GDP Revision**: German GDP forecasts for 2025 and 2026 have been revised up by 40 basis points each, now expected to be **0.8%** and **1.3%** respectively [3][15][53]. 2. **Fiscal Package Impact**: The proposed fiscal easing package could lead to an increase in the fiscal deficit to **3.8%** of GDP in 2026, up from **3.2%** previously, and **3.2%** in 2025, up from **3.0%** [15][74]. 3. **Inflation Outlook**: The impact on inflation is expected to be limited, with a marginal increase of **10 basis points** each year in 2025 and 2026 [15][53]. 4. **Defence Spending**: The fiscal package includes provisions for defence spending, allowing for borrowing above **1%** of GDP, with expectations of gradual increases to **3%** by 2030 [18][23]. 5. **Infrastructure Fund**: A **€500 billion** special fund for infrastructure spending over ten years is proposed, with **€100 billion** allocated to regional authorities [21][18]. 6. **Borrowing Room for Regions**: The proposal extends borrowing capacity for regional governments to **0.35%** of cyclically adjusted GDP, which could lead to an additional **€10-15 billion** in borrowing [22][44]. 7. **Investment Sentiment**: There is an anticipated upswing in investment driven by improved corporate sentiment post-election, with a potential GDP impulse of **40 basis points** in 2025 [45][48]. 8. **Risks to Forecast**: Risks include the potential failure of the fiscal package to pass, prolonged external demand weakness, and uncertainties around the implementation of proposed policies [16][57][54]. Additional Important Content 1. **Market Reactions**: The expected fiscal stance has shifted the trading range for the 10-year Bund to between **2.5%** and **3%**, with significant market reactions observed [66][74]. 2. **Supply Increase**: Gross supply of bonds is expected to increase significantly in 2026, estimated at **€342 billion**, which is **€78 billion** more than in 2025 [66][67]. 3. **Legislative Process**: The vote on the fiscal package is scheduled for **March 18**, with subsequent coalition negotiations expected to shape future fiscal policies [12][60][64]. 4. **Long-term Implications**: The proposed fiscal changes mark a significant shift in Germany's fiscal policy, potentially leading to higher financing needs and a structural change in the EU fiscal landscape [73][74]. This summary encapsulates the key points discussed in the conference call regarding the German economy, fiscal policies, and their implications for growth, inflation, and market dynamics.