In this special episode of The Weekly Briefing podcast, Group Chief Economist Neil Shearing and Chief Global Economist Jennifer McKeown outline Capital Economics' expectations for 2026.

They tackle the key drivers and risks in the year ahead, examining how the AI narrative will unfold, why the US will be a notable outperformer, how much further China’s exporters can take market share and why a new Fed chair probably won’t deliver the rate cuts that Donald Trump wants.

Learn more:

The World in 2026 homepage

The year began amid optimism that Europe was finally prepared to meet its economic potential. But as the end of 2025 approaches, how much has actually changed in the European story of weak growth and political fragmentation? In this special episode of The Weekly Briefing from Capital Economics, Chief Europe Economist Andrew Kenningham and Group Chief Economist Neil Shearing join David Wilder to what has – and hasn’t – changed in the European outlook.

They explore Europe’s challenges in navigating an increasingly fractured global economy, including whether its industries are equipped to handle competitive pressures from the US and China, the risks stemming from elevated public debt, and why the urgency to ramp up defence spending isn’t being met by action.

Plus, in a clip from a recent client briefing, EM economists Liam Peach and William Jackson provide an update on the war in Ukraine and the latest White House efforts to broker a ceasefire.

Analysis and events referenced in this episode

Drop-In: The World in 2026 - The global macro and market outlook
Spotlight: The future of Europe
Read: ECB interest rates cuts doing little to boost growth
Watch: China and Russia – The limits of the “no limits” partnership

Read: Russia & China: a “no limits” partnership with limits

After all the kite-flying, the doom-laden briefings and the policy U-turns, the UK Budget landed well with the markets. But did gilts rally simply because the news wasn’t worse, or has the government genuinely won over the bond vigilantes? And for all the initial success in launching this Budget, where is the strategy that will lift the UK’s anaemic growth? Chief UK Economist Paul Dales and Deputy Chief UK Economist Ruth Gregory join David Wilder to assess the Budget’s impact, the economic fallout and why lingering political uncertainty still points to more bond-market volatility in 2026.

Plus, Chinese fixed-asset investment is falling, prompting debate among China watchers about whether it's a sign the crackdown on price wars and overcapacity is biting. But China Economist Leah Fahy explains why there could be less to investment's weakness than the success of Beijing’s policies – and the latest reading of our China Activity Proxy helps show why.

Analysis and events referenced in this episode

Watch: The Autumn Budget – What’s next for the economy and markets?
Register: Autumn Budget – What does it mean for the property outlook?
Read: Autumn Budget - Markets give the smaller-than-expected Budget the thumbs up
Explore: The economic and market impact of AI
Read: CAP: Growth slows, but industry still going strong

Is the bubble bursting? Despite a big earnings beat from Nvidia, concerns about overheated AI valuations are mounting. Jonas Goltermann weighs the risks that the equities rally is fading. We also look at what to expect from Rachel Reeves’ Budget after an unusually turbulent build-up, and the possible economic fallout. And Neil Shearing considers what this week’s Trump-Mohammed bin Salman meeting signals about Saudi Arabia’s position in a fracturing global economy.

Analysis and events referenced in this episode:

UK Drop-In: The Autumn Budget – What’s next for the economy and markets?
What if the AI stock market boom turned to bust?
Why we aren’t worried about US tech valuations
MbS’s Washington trip tips the balance in US’s favour

Where is the big macro payoff from the surge in artificial intelligence investment? And is AI wiping out entry-level jobs? The latest episode of The Weekly Briefing from Capital Economics unpacks these questions and examines what this new wave of technology really means for growth and labour markets.

The episode also marks the reopening of the US government with a clear assessment of the economic outlook, and explores how fiscal risks are disrupting politics across the US and Europe. These pressures are set to shape policy debates well into 2026.

Analysis and events referenced in this episode

Read: How to think about AI investment
Read: Has the AI “jobpocalypse” begun?
Read: China summer investment slump likely to be short-lived
Watch: EM Drop-In: India at the geo-economic crossroads
Capital Economics events

Who was Rachel Reeves really speaking to when she hinted at higher taxes this week? How much of a threat is the Supreme Court to Treasury tariff revenues? And how useful is “G2” as a lens for the new global order? Group Chief Economist Neil Shearing unpacks these big global macro questions in the latest episode of The Weekly Briefing from Capital Economics. Also on the show, Chief Markets Economist John Higgins assesses whether this week’s sell-off marks the end of the great AI-driven US equity boom, or was just a wobble on the way to new highs.

Analysis and events referenced in this episode

Read: UK Autumn Budget 2025 Preview
Read: How could the Budget influence UK housing?
Drop-In: India at the geo-economic crossroads
Drop-In: Commercial Property Outlook - What to watch out for in 2026
Read: Reliance on tech is a double-edged sword
Read: What to make of the mixed reaction to this week’s big-tech results

The Fed is trying to calibrate policy in the midst of a government shutdown that’s effectively cut off the flow of data. Jerome Powell says that when you’re driving in fog, you should slow down – but there’s still a case for the FOMC to follow this past week’s rate cut with another move in December, says Deputy Chief North America Economist Stephen Brown. He talks to David Wilder about why the state of the US economy argues for another cut this year, but fewer in 2026 than markets currently expect.

That Fed meeting wasn’t the week’s only big event. In Korea, Donald Trump held the first face-to-face meeting of his second term with Xi Jinping. The one-year truce resulting from that meeting has eased near-term US-China trade tensions, but much could still go wrong, warns China Economist Leah Fahy. She discusses what might plunge bilateral relations back into crisis, the health of China’s economy, and why – even if Washington clears Chinese firms to buy cutting-edge AI chips – they may not do so.

Analysis and events referenced in this episode:

Drop-In: The Fed, ECB and Bank of England – Latest decisions and policy outlook
Capital Economics Events

Read: Fed cuts and ends QT, but further loosening not guaranteed
Read: Bank of Canada cuts but thinks it has done enough
Xi-Trump talks buy China time to decouple at its own pace
The economic and market impact of AI

Out of the darkness of a shuttered US government comes a rare data release – and it’s a CPI report that’s given markets some relief as the week draws to a close. But does September’s inflation data really clear the way for Fed rate cuts in December as well as October, as investors now expect?

In this week’s episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing explains why the Fed is likely to stay cautious, previews key upcoming central bank meetings, and looks ahead to next week’s much-anticipated Donald Trump-Xi Jinping summit in South Korea.

Also on the show, the US Treasury’s new sanctions on Russia’s two biggest oil exporters have brought a key risk to our below-consensus oil price forecasts to the fore. Chief Climate and Commodities Economist David Oxley discusses how much this move could shake up the outlook – and whether Trump will actually follow through with full enforcement.

Analysis and events referenced in this episode:

Read: China ramping up use of export controls

Drop-In: Argentina’s mid-term elections – A referendum on Milei’s reforms
Drop-In: The Fed, ECB and Bank of England – Latest decisions and policy outlook