After many years of mainly talk, the EU has grown more ambitious in the past two years, and this trend is accelerating in 2026. Last year, Europe's ambition was driven by an 800 billion euro defense investment plan, in addition to Germany rewriting its constitution to enable bigger government investments. But Europe's two most ambitious projects in 2026 are more structural than these spending programs. First, a trade deal with India - now the world's fourth-largest economy but trading little with Europe - that could open a massive market for European industry. Second, the Industrial Accelerator Act, which will introduce "Buy European" legislation directing EU procurement toward EU suppliers. The biggest challenge remains that some member states oppose projects that lower trade barriers (such as France), whereas others oppose projects that raise them (such as the Netherlands). However, given the current momentum in Europe and the highly uncertain geopolitical situation, the probability that both projects advance is significant. If they do, this could contribute to European stock markets' continued outperformance versus the US, as in 2025.
The extreme volatility in metals markets (in recent days, the price of silver has fallen by nearly 30%) reflects a deep structural problem in Western societies. In recent years, investors have increasingly allocated capital to gold and silver as hedges against the inflation of government-issued currencies – commonly referred to as the “debasement trade.” Behind this investment strategy lies the demographic reality of aging populations. Over the past 50 years, governments have steadily redirected spending toward healthcare and pensions for a growing elderly population, crowding out long-term investment and pushing down economic growth. This has led to record levels of government debt and a greater reliance on inflation as the means of reducing the burden of debt over time. This precarious economy of rising prices, particularly in basic needs such as housing and groceries, has produced a fragile political system defined by the rise of populism.
Because all of this is rooted in demographics, it is likely to persist. Recent policy shifts in the United States and Europe signal an attempt to confront this reality by cutting healthcare and pension commitments, but such measures do not address the underlying problem and are likely to intensify political unrest.
The deeper issue is that governments lack a strategy capable of offsetting the reality of aging populations. One possible exception is China. With a limited tax base to finance its own demographic decline, Beijing has been forced into a more radical response: restructuring its economy toward innovation, including in healthcare itself.
At the start of 2026, just as the United States’ confrontation with other countries threatens global stability, its withdrawal from other regions is also fueling conflict, particularly in the Middle East. The region’s dynamics have shifted fundamentally in the past few years: as the United States retreats, the most powerful country in the region, Iran, has been weakened by its war with Israel following the Hamas attack of October 7, 2023. The result is an open contest for control of the region among five countries: Israel, Turkey, Saudi Arabia, the United Arab Emirates, and Qatar. In April 2025, Israel bombed designated sites for three Turkish military bases in Syria, while Saudi Arabia and the United Arab Emirates - until recently longstanding allies - have engaged in proxy conflicts in Yemen, Sudan, Libya, and Somaliland. Looking ahead, it is Saudi Arabia that appears most at risk of triggering a destabilizing scenario, as its future is increasingly threatened by shifting dynamics in the global oil market on which it so heavily depends, driven by rising US production and the prospect of Venezuela, and possibly Iran, regaining access to global oil markets.
