Strategy focus - 2026: Sovereignty challenges that will shape the markets

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From monetary support to fiscal support. After a year marked by the normalization of monetary policies in 2025, 2026 is shaping up as a turning point toward massive fiscal support in several major economies. Faced with persistent geopolitical uncertainties and the need to strengthen economic sovereignty, many governments are indeed intensifying their actions to support activity.

• The German Bazooka: A major shift with a massive stimulus plan focused on industrial sovereignty, energy transition, infrastructure, and defense. The public deficit is expected to rise from €143 billion to €175 billion in 2026.

• European Plans: The Next Generation EU plan expires at the end of 2026, but one-third of the €750 billion remains available and will continue to support public investment in Southern countries. The Rearm Europe plan will accelerate defense spending increases, with more European cooperation.

• The Big Beautiful Bill in the United States: Congress has approved the extension of tax cuts, fiscal relief for households and businesses, and additional spending on infrastructure, defense, and certain social programs. The Congressional Budget Office estimates this budget will increase the deficit by $3.4 trillion cumulatively over 2025-2034.

• The new Abenomics in Japan: The new Prime Minister announced a substantial support plan (over €110 billion, approved Friday, November 21), focused on stimulating domestic demand, private investment, and infrastructure modernization.

• The Five-Year Plan in China: Expectations remain high for a large-scale stimulus plan given the persistent sluggishness of domestic demand. Last October’s Plenum specified the government’s strategic priorities: industry, technology, and consumption. More concrete measures are expected to be announced in March 2026.

Support enabling economic resilience. These fiscal supports will help maintain robust global growth despite persistent geopolitical uncertainties. However, effects will vary by region depending on the scale and nature of the announced plans. This activity strength could sustain underlying inflationary pressures, notably in the United States and in energy and infrastructure sectors.

2026 will be marked by key political deadlines likely to add volatility to budgetary decisions: Jerome Powell’s term ends in May, U.S. midterm elections in November, and German legislative elections in September.

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