2026: ‘Capital Market success in 2026 will not be about holding good cards, but of playing a poor hand well’ (with apologies to Robert Louis Stevenson)

Robert Louis Stevenson said that “Life is not a matter of holding good cards, but of playing a poor hand well.” If we apply his maxim to global capital markets in 2026, the cards before us look far from ideal. There remain significant risks linked to persistent inflation, central bank rate cuts and ongoing geopolitical tensions. Yet, as seasoned players, skillful play can turn even a weak hand into a winning one.

UK Labour Market Weakens Amid Cost‑Cutting

At first glance, the UK card is particularly poor. The private sector jobs market is in recession, with employment numbers falling at the fastest annual rate since the pandemic. Redundancies have surged to 5.3 per 1.000 employees in the three months to end October 2025—the highest since February 2021. Total pay growth stands at 4.7% driven by a 7.6% rise in public sector salaries, masking much weaker private sector wage growth. The Bank of England has reduced interest rates given lower expectations for inflation, but this is due to a demand slump. UK company boards are therefore cost cutting rather than investing. We have seen a wave of all cash takeovers of UK quoted companies by private equity and trade buyers at substantial premiums to their stock market valuations. And there has been a tentative sign that IPOs might be returning with Shawbrook listing at a market cap of £1.92 billion and then trading at a premium.

What about the rest of Europe? France’s debt is nearing 120% of GDP. In Italy, growth remainssluggish, with similarly high debt. Only Germany is in a better position with debt to GDP well below those of other countries. However, the encouraging news is that growth forecasts are being revised upwards, supported by greater private sector investment and more resilient exports.

United States Enters 2026 With Economy Expanding at Fastest Rate in Two Years

The U.S. economy faces a daunting fiscal position too, with public debt still on the rise, unemployment numbers increasing (4.6% in November) and cost of living remaining high—but it has powerful cards. The United States is a global capital magnet, attracting the largest share of global capital, supported by deep and liquid markets. The country is also the global epicentre of artificial intelligence (AI) investment and, while the sustainability of technology sector earnings has been questioned, technology infrastructure spending is surging.

The U.S. economy demonstrated great resilience across 2025, and GDP in the third quarter grew at a much greater pace than expected, with an annualized 4.3% growth boosted by strong consumer spending, increase in exports and government spending.

There has been a significant uptick in IPO and M&A activity in the second half of 2025, and there is increasing optimism that this trend will continue into 2026. There is great investor confidence in IPOs, with strong aftermarket performance and most deals pricing at or above range showingrenewed investor enthusiasm. For example, Medline jumped more than 40% after the biggest IPO of 2025. M&A activity also saw a significant rebound, with significant activity in the tech, healthcare and energy sectors.

Standing Out from the Pack:

Investors and analysts have new expectations, the media landscape is fractured and the AI transformation has just begun. CEOs and the C-Suite will remain under constant pressure in 2026with investors wanting constant reassurance that any corporate strategy will guarantee the best returns. An integrated communications approach is needed to meet target audiences where they are to cut through the noise.

M&A activity will likely remain strong in 2026. Lower interest rates, corporate (and bank) profits are high. Governments around the world are desperate for growth going soft on regulation which may lead to Board rooms considering mega mergers which would have been unthinkable only a few years ago. Companies need to prepare to communicate with more than just financial audiences. Conditioning the environment ahead of time, having a dedicated government relations strategy and full stakeholder approach is essential to ensure deal success.

2026 will not be about holding good cards, but about playing a poor hand well. The global capital markets face headwinds, whether they be economic, fiscal or structural, but they also offer opportunities for those who can adapt, diversify and think differently. With skilful play, even a challenging hand can win.