Outlook 2026: Andy Langenkamp (ECR Research)
This text was originally written in Dutch. This is an English translation.
By Andy Langenkamp, Senior Political Analyst, ECR Research
What are the economic prospects for 2026?
'In 1986, Timbuk 3 scored a hit with The Future's So Bright I Gotta Wear Shades, in which optimism clashed with the threat of a nuclear apocalypse. That year, the S&P 500 posted a 19% gain. Forty years later, investors are once again in sunny spirits, with stock markets hovering around record levels. Once again, there is a threat in the air: not so much of nuclear war, but of new nuclear tests. The risk of this is becoming increasingly apparent. This fits in with the picture of gathering geopolitical clouds.
The trend towards geo-economic fragmentation is strong. The politicisation of financial flows and trading systems will translate into less liquidity and higher credit risks and volatility. The key question becomes “how to operate in a fragmenting system with divergent rules, sanction regimes and data spheres?”.
US-Chinese rivalry is the most decisive force. Technology, energy and raw material supplies, trade, financing and security are becoming more closely intertwined. Europe finds itself between two superpowers – and Russia – and, although it is not becoming a war economy, militarisation is playing a greater role. Defence budgets are rising sharply, while Germany, for example, is considering a return to conscription.
Higher defence (and energy) spending, combined with overstretched AI valuations and sky-high government debt, pose an increasing risk, with a shift towards a world in which market volatility will be greater than in the decade following the euro crisis.
Finally, a few events to keep an eye on: the simultaneous expiry of the truce in the US-China trade war and the US midterms in November. If the Democrats regain control of the House, Trump's policy space will be reduced. Furthermore, 2026 is an important election year in the emerging world. India, Mexico and Turkey will go to the polls against a backdrop of high debt, low(er) growth and growing inequality.'
The key question will be how to operate in a fragmenting system.