Countdown to 2026

We hope you enjoy this light-hearted blog on some of the themes that might just make headlines (and portfolios) in the year ahead. We wish you a happy, healthy and prosperous 2026.

10 – The Eurozone welcomes a new member

Bulgaria has been approved to join the Eurozone next year, which will bring the total to 21 member states. Since adopting the euro from 1999, 10 major currencies were replaced in founding states (the French franc, Belgian franc, Deutsche mark, Italian lira, Spanish peseta, Dutch guilder, Portuguese escudo, Austrian schilling, Irish pound and Finnish markka). The euro has experienced a strong 2025, particularly against the dollar, highlighting the potential benefit of diversification[1] in terms of currency (as well as asset class). Last chance for this pub quiz – what currency does Bulgaria use and what it does it mean? It’s the lev, which means Lion!

9 – The telescope behind a global data boom

The Vera Rubin Observatory in Chile is about to give stargazing a serious upgrade. Armed with the world’s largest digital camera (a whopping 3.2 gigapixels)[2], it will snap hundreds of images of the night sky every evening for the next decade, hunting for everything from rogue asteroids to the elusive ‘Planet 9’ lurking beyond Neptune. By the end of its survey, it’ll churn out around 60 million gigabytes of data – tiny compared to the mind-bending 220 trillion gigabytes[3] expected in the global datasphere by 2026. While the telescope itself won’t shake up your daily life, the data boom behind it is already reshaping investment strategies and fuelling an energy demand surge that’s anything but astronomical fiction.

8 – Driving your own future: The £800bn DC revolution

In 1986, pensions went from ‘cruise control’ to ‘manual gearbox’ – and suddenly, you were the driver. Power! Risk! Responsibility! The Social Security Act introduced the concept of personal pensions, allowing individuals to manage their own pensions for the first time and represented a pivotal moment shifting risk from employers to individual employees. This paved the way for the UK Defined Contribution  (DC) sector, which has risen to over £800bn in assets this year (including self-invested arrangements)[4]. This means the UK is the 4th largest DC market… (Jeremy Clarkson voice)… in the world[5].

7 – Rare earths taking centre stage

Rare earths are back in the geopolitical spotlight. Out of the 17 elements in this group, China has imposed controls on 7 and dominates the entire supply chain, accounting for roughly 70% of global market share and close to 90% of processing[6]. These minerals aren’t just for gadgets – they’re critical for defence systems, EV motors, and advanced tech. That makes them a powerful bargaining chip in US–China relations, with Beijing signalling its willing to wield its dominance when trade tensions flare.

6 – From cathedrals to crossings: big builds, big timelines

144 years after the first stone was laid, Barcelona’s iconic Sagrada Familia is expected to be completed in 2026. Additionally, construction on the Lower Thames Crossing, one of the most ambitious road infrastructure projects in UK history, is to commence next year. It’s due to take 6 years to build[7]. We would like to be clear that us linking this to a construction project that took 144 years is purely coincidental and does not reflect any scepticism on the project timeline.

5 – Welcome to the private markets party

Think of LTAFs as the VIP lounge for private markets…except the FCA handed out more passes than anyone expected! 2026 marks five years since the FCA introduced the Long-Term Asset Fund (LTAF) regime[8], creating a new category of FCA-authorised open-ended funds designed for long-term illiquid investments. Since then, more than 30 different LTAFs have been authorised by the FCA. Assets under management stands at over £5bn across all LTAFs[9], and this is expected to increase significantly as further capital is committed.  

4 – From independence to index dominance…or is it?

July 4th 2026 will mark the 250th anniversary of the Declaration of Independence of the United States of America. The US has dominated market returns for much of the past decade, accounting for over 60% of global stock market capitalisation[10], despite representing just c.4% of the world’s population and c.25% of global GDP[11]. However, this hasn’t always been the case: in the late 1980s, Japan briefly overtook the US in terms of global equity capitalisation, and Sweden and Australia have outperformed the US when comparing different time periods.[12] This has created arguable concentration risk within portfolios. However, uncertainty about tariffs and policy uncertainty has weakened US exceptionalism to an extent in the latter half of the year.

3 – Football unites, trade divides

The FIFA World Cup will take place in 2026 across 3 countries; Canada, Mexico and the United States. The competition will feature an expanded format, 48 teams split into two groups of four[13]. For the first time in the competition’s history, Africa will send nine teams directly to the World Cup.  As these same countries gear up for the tournament, they’re also navigating renewed tensions over tariffs. Trade wars are shaping up to be a defining theme of 2026, with ripple effects across global markets that could rival the drama on the pitch.

2 – Rate changes on the horizon?

Consensus expectations are for 2 interest rate cuts in the US next year, amid a potentially slower labour market and signs of calming inflation[14]. Analysts are also suggesting we may not see any rate changes in the EU, at least one in the UK and potentially two rate hikes in Japan[15], which has seen persistent core inflation above target and strong wage growth.

1 – AI’s $1 trillion moment

Forget trends…AI in 2025 was the trend, and 2026 is lining up for an encore with OpenAI’s[16] blockbuster IPO. AI was certainly a dominant theme in 2025, with AI-related companies (Mag7 + chipmakers) representing around a third of S&P500[17] and AI infrastructure spending hitting over $300bn in 2025[18]. We believe AI’s beneficiaries will only continue to broaden across sectors in the coming years. The latter half of 2026 will also see the much anticipated IPO of OpenAI, which according to some analysts could see the company being valued at up to $1 trillion[19].

 

Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecasts made will come to pass.

[1] It should be noted that diversification is no guarantee against a loss in a declining market.
[2] Vera C. Rubin Observatory, 2025 Key numbers | Rubin Observatory
[3] IDC Analyst, 2025. IDC Analyst Report: High Data Growth and Modern Applications Drive New Storage Requirements in Digitally Transformed Enterprises
[4] The Pensions Regulator, 2025 Occupational defined contribution landscape in the UK 2024
[5] Corporate Advisor, 2025 UK pension assets decline despite global growth of DC funds - Corporate Adviser
[6] CNBC, 2025 It's time for U.S. to treat rare earths as power. China already does
[7] BBC News, 2025 Lower Thames Crossing plan for Essex and Kent is approved
[8] FCA, 2021 PS21/14: A new authorised fund regime for investing in long term assets | FCA
[9] Morningstar, 2025 LTAFs Will Get an ISA Boost, but New Investors Should Do Their Homework | Morningstar UK
[10] Bloomberg, 2025
[11] Statista, 2025 United States - Share of global gross domestic product (GDP) 2030| Statista
[12] Bloomberg, Visual Capitalist 2025.
[13] FIFA, 2025. fifa.com/en/tournaments/mens/worldcup/canadamexicousa2026/articles/fifa-world-cup-2026-hosts-cities-dates-usa-mexico-canada

[14] Bloomberg, 2025 Watch Tension for the FOMC to Continue in 2026: Watt - Bloomberg
[15] Bloomberg, 2025 2026 Will Bring More AI and More Geopolitical Fragmentation - Bloomberg
[16] For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an L&G portfolio. The above information does not constitute a recommendation to buy or sell any security.
[17] Bloomberg, 2025
[18] CNBC, 2025 Tech megacaps to spend more than $300 billion in 2025 to win in AI
[19] Reuters, 2025 Exclusive-OpenAI Lays Groundwork for Juggernaut IPO at up to $1 Trillion Valuation