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Market insights
Associate Director
Following our Webinar Reflections & Outlook for 2026, this video recap provides a clear summary of the key economic and investment themes shaping the year ahead. Designed for investors seeking context and perspective, it reviews the lessons of 2025 and explores what early indicators may signal for UK and global markets as 2026 begins.
James Bacon reviews the global economic backdrop shaping the outlook for 2026, including diverging growth paths across the US, UK, Europe and China, and the role productivity, energy prices and structural change play in setting the direction of travel. Inflation trends across major economies are assessed, explaining why price pressures have eased but remain above target, and what this implies for interest rates and policy decisions over the coming year.
Alex Meadowcroft provides a balanced assessment of current AI adoption trends and investment activity, alongside the competing narratives of AI as either a transformative productivity driver or a source of speculative excess. Rather than attempting to predict outcomes, the discussion focuses on managing uncertainty.
The session concludes with an in-depth presentation from Dr James Watson, Associate Professor in Financial Economics at The University of East Anglia, and an external member of the Chadwicks Investment Committee. Who explores a UK-specific outlook for 2026, covering growth expectations, inflation persistence, interest rates, fiscal constraints, bond markets and political risk, providing context for investors navigating an increasingly complex environment.
Key themes covered:
0:00 – James Bacon – Global growth outlook for 2026 US productivity, weaker UK/EU growth, China’s transition and the impact of energy prices
3:19 – James Bacon – Inflation update across major economies Why inflation has cooled but remains above target in the UK and US
3:23 – James Bacon – Government debt, fiscal constraints and public investment Debt levels, austerity hangover, and renewed spending on defence, energy and infrastructure
6:04 – James Bacon – The long-term challenge of ageing populations Demographics, shrinking workforces and pressure on pensions and healthcare
8:30 – James Bacon – Stock market performance and returns since 2017 Regional winners and losers, currency effects and the US dominance
11:20 – James Bacon – Equity valuations and market concentration US valuations, tech dominance and comparisons with Europe, Japan and the UK
15:36 – James Bacon – Risks to market stability Tech valuations, Fed leadership risk and private capital concerns
18:10 – James Bacon – AI adoption and investment trends Where AI is being used, adoption rates and hyperscaler investment
20:44 – Alex Meadowcroft – Is AI a boom or a bubble? Competing narratives and why experts disagree
23:20 – Alex Meadowcroft – The “bubble” case for AI Valuations, demand assumptions and FOMO investing
26:10 – Alex Meadowcroft – The “boom” case for AI Productivity gains, real-world adoption and profitability
27:14 – Alex Meadowcroft – What AI uncertainty means for investors Why diversification matters more than prediction
30:30 – James Bacon – Portfolio construction and diversification in practice Global equity exposure, value and small-cap tilts
33:40 – James Bacon – Market timing vs staying invested Why emotional decisions destroy long-term returns
35:50 – James Bacon – Market shocks: balanced portfolios vs cash Historical shocks and why balanced portfolios recover over time
37:10 – Dr James Watson – UK economic outlook for 2026 Lessons from 2025 and expectations for growth
40:18 – Dr James Watson – Inflation, interest rates and Bank of England policy Why rate cuts may be gradual and inflation sticky
44:30 – Dr James Watson – Fiscal rules and UK government policy constraints Debt servicing costs and limited fiscal headroom
48:54 – Dr James Watson – Bond markets and government borrowing UK vs US gilt yields and why headlines overstate risk
51:14 – Dr James Watson – Central bank independence and market stability Why predictability matters for inflation and growth
1:01:14 – Dr James Watson – Trump, the Fed and political risk Potential risks to US monetary policy independence
1:12:52 – Dr James Watson – Key takeaways and outlook Growth expectations, interest rates and geopolitical risks
This video is intended for information only and does not represent personal financial advice. But if you would like to speak to one of our Chartered Financial Advisers, please get in touch. Past performance is not a guide to future performance. The value of an investment can fall as well as rise and is not guaranteed – you may get back less than you paid in.