From interest rates and debt to artificial intelligence and jobs, we're looking ahead to 2026.
It's World Business Express from the BBC World Service.
I'm Liana Byrne.
Let's look ahead to what 2026 could hold for the global economy.
Will the US keep powering ahead?
Is China finally turning a corner?
And how much further can interest rates really fall?
Ross Mould, Investment Director at AJ Bell, is joining me from Lyon.
Ross, you got caught up in a news story yesterday, didn't you?
I did.
We were coming home from a beautiful three-day break in Lille in northern France.
And then the Eurostar service broke down.
There were no trains.
So, after a frantic search to try and find any route home, we got a high-speed train to the south of France, here in Lille.
And we're actually taking an airplane home this evening, a good day later than we would have originally been expecting.
Well, Russ, we really appreciate you being on the programme.
I know all the Eurostar services are back up now, but luckily our programme isn't too long.
So let's get into it.
What is the first thing we should be watching out for?
So the first thing to look at, as always, is the US economy.
America is the biggest economy, home to the world's biggest stock market, biggest bond market.
It's reserve currency.
So generally where America goes, the world tends to follow.
And right now financial markets are looking for a perfect combination of good economic growth, steady inflation, minor reductions in interest rates and really good corporate profits growth.
Something like 15% is the consensus expectation profits growth according to FactSet for 2026.
That's more than double the long-term historic rate.
It is the biggest global economy in the world.
We're always looking out for that.
But I'm quite interested, Russ, about your predictions for China.
Yeah, I mean China's the second biggest economy and it's been coming through a very, very difficult period.
A spectacular real estate bust has been holding the economy back.
And also the ruling authorities have been looking to, have been running this involution policy of trying to prevent manufacturing overcapacity, which has led to prices falling sharply.
And they think that's been holding the economy back.
So you can look at a combination of monetary stimulus from lower rates, but also reform of the economy in an attempt to try and stimulate private consumption.
So there's much less reliance upon manufacturing infrastructure and real estate.
So it's trying to get growth through a major rebalance of the economy.
And it'll be interesting to see how easy that is to achieve.
The stock market has been rallying hard in expectations of better times ahead.
Okay, Ross, I'm going to give you a break.
Do you know what a futurist is?
Oh, no, I wouldn't.
But I guess somebody who's got the very difficult job of trying to work out what the future is going to bring.
Well, I spoke to one.
He's called Tom Cheesewright.
He's an applied futurist and he says he advises businesses and governments on the pressures shaping the years ahead.
Quite an interesting job.
And I asked him what his key predictions are for 2026, what they mean for workers, employers and governments.
My first prediction for 2026 is that we have to start building again, and building big infrastructure again.
I think we're going to see a boom, not because we want to, not necessarily because we can afford to, but because we need to.
We have underinvested in the big stuff the roads, the bridges, the reservoirs for quite some time now, and they are starting to fail.
And they're starting to fail at a faster rate because they're now being affected by climate change.
Now Tom, we spoke last year and I just wanted to play a little bit of that conversation back to you see what you think.
And one of the big ones in the work environment is the question of when we work rather than where.
First of all, when in the day.
There's when in the working week.
I think the big conversations have started about the four day working week.
But then it is also in the working year.
You know, we're starting to see drive for more opportunities to travel, more opportunities to experience other parts of the world and maybe some pressure around if not necessarily extended holiday time, then perhaps the opportunity to take the occasional sabbatical or go and work abroad for some period of time in your working life.
Well, Tom, what do you think?
Did you think you got that one right?
Because what I've seen so far from this year and we're coming to the end of it is that people are actually being asked to come back to work more often, particularly because the economy isn't doing so well.
Workers don't really have that leverage anymore.
It's interesting because if you'd asked me, I would have said I got this one horribly wrong.
But I had a conversation with a load of HR leaders recently and they all told me the complete opposite.
They said actually no, we're very much having these conversations, particularly about the when during the day and more flexibility around the working day.
So I guess it's sort of.
I give myself a bit of a half mark for this one, because I don't think we're having those conversations about sabbaticals and more remote work.
We're not ready for that level of flexibility.
With regards to the return to office mandates, I think those are getting a lot of headlines.
I don't think they're quite as prevalent as people think.
Now, last year, of course, we spoke about AI, huge topic.
And also jobs, graduates.
Is AI taking away jobs from graduates?
The stats so far are really interesting because we have seen a very rapid decline in the number of graduate roles.
But it's a rapid decline that some people point to as starting from the release of ChatGPT.
Other people would point to the fact that the release of ChatGPT coincided with an all-time record high in the number of graduate jobs.
So the drop so far... have arguably been a return to the trend.
In 2026 I think that's probably going to be a bit different.
I think we will see among some of the classic graduate recruiters those in finance and law and accounting and consulting we will see a reduction in the number of people that they need.
Because these organisations are in some ways best equipped to leverage AI to do some of the work.
The challenge that represents is in five years time, where do your more senior workers come from if you haven't been training them?
OK Tom, for your final prediction, I want you to give me something a little bit quirky, a bit interesting.
What do you think?
It's the countertrend.
And as a futurist, we're always looking at both trends and countertrends.
And the more things are digital, the more it seems we crave the alternatives.
In 2026, I think we might see a bit of a resurgence from something of a dying analogue device, and that is cash.
I think we might see the hipsters adopting cash as something that's a bit more in line with their analogue lifestyle, their vinyl as a way to transact with each other and a way to keep money, arguably in the community.
That was Tom Cheese right there, Applied Futurist.
Ross, what do you think about that?
Cash economy.
I can see why because if you're just constantly tapping a card or a contactless device, it can be quite difficult to budget and exactly keep track of what you're spending.
So, if times do get tougher, it may be able to help people manage their finances at a time when the cost of living is still a major challenge.
Yeah, I have to say I have been caught out this year, so hopefully I won't get caught out again in 2026.
OK, let's listen to a couple of headlines from Amber Mahmood.
The Netherlands will introduce a new pension system tomorrow.
Before, the country promised retirees a fairly stable guaranteed income, but is now changing to a defined contribution system tied to market outcomes.
US drug makers plan to raise prices on at least 350 branded medicines next year, despite pressure from the Trump administration.
And finally, India says its economy has overtaken Japan to become the world's fourth largest economy.
Okay, government debt.
It can sound quite abstract for a lot of people, but it does shape the decisions that affect all of us.
It was a big story in 2025 because, according to the Institute for International Finance, over 26 trillion was added to global debt stockpiles to reach fresh highs of over 340 trillion.
Ross, has this become a problem and is it likely to feed into 2026?
It's a growing problem.
It's one that's exercising the thoughts of a lot of Western governments, in particular the UK government.
The French government has wobbled on several occasions trying to put through austerity reforms.
And even America went through a government shutdown as it tried to make all of its welfare payments affordable.
But it only becomes an issue for all of us if financial markets lose faith in governments willingness, ability to repay.
Now they'll always be able to repay, but the worst case scenario is they do it by printing more money or they do it by inflating and devaluing the worth of the debt held.
Right now inflation, austerity or default and none of them are particularly appealing prospects.
So it is a difficult situation.
So people start to lose faith and the debt begins to get out of control.
Okay russ, we're running out of time.
Our last world business express for the year.
It's been a pleasure having you.
It's been great fun.
Any plans for the new year?
Get home safe on a flight from Lyon is about as far as I'm going to go right now.
If I can do that tonight, I'll be absolutely ecstatic.
We all have our fingers crossed for you.
Have a happy new year.
Russ Mould, Investment Director at AJ Bell.
And that's it from World Business Express from the BBC World Service.
I'm Liana Byrne.
Happy New Year.
