10/01/2026 by Tony Redondo
In 2026, the world has shifted toward a “might is right” paradigm where hard power dictates global standing. This was underscored by the recent US military raid to capture Nicolás Maduro, a tactical success that leaves the Trump administration responsible for a Venezuelan economy decimated by 500% inflation. The currency crisis is acute. Exactly a year ago it would have cost 52 Bolivars to buy $1. Now, while the official exchange rate sits at 301 Bolivars per USD, the black market, where 70% of transactions occur, demands 560 Bolivars. Because essential goods are priced at black-market rates while salaries remain pegged to official figures, the resulting income squeeze is untenable.
Seeking to stabilize the region and secure resources, the US is eyeing Venezuela’s immense oil reserves and the 31 tonnes of gold currently frozen in the Bank of England, now valued at over $4 billion. By controlling these assets, President Trump aims to drive global oil prices toward $50 per barrel, simultaneously curbing domestic inflation and draining Russia’s war chest.
Beyond South America, the White House has pivoted toward Greenland, a Danish territory critical to the “Golden Dome” missile defence initiative. Greenland’s strategic value is twofold. It offers new Arctic shipping routes and contains 10% of the world’s rare earth reserves, including 25 of 34 materials essential for modern technology. Clayton Allen of Eurasia Group notes that Trump, viewing the island through a real estate lens, sees it as vital for economic and strategic defence over the next 50 years. Rather than a military invasion, “Wall Street warriors” are expected to lead the charge through massive infrastructure and mining investments via a proposed “Compact of Free Association.” This presents Greenland with a choice between immense wealth and its indigenous ties to Denmark.
Globally, these aggressive manoeuvres aim to pre-empt Chinese influence and create a strategic buffer. However, this unilateralism risks fracturing NATO and fragmenting the global economy. While the US may benefit from lower energy costs, the UK and EU face growth slowdowns due to rising protectionism and export barriers. According to Deloitte surveys, “geopolitical risk” has now surpassed productivity as the top concern for finance chiefs.
The current environment mirrors the complex, multipolar tensions of 1913, signalling a volatile era where resource dominance is the ultimate prize.
It’s time to power up.
Currency Exchange Rates Update
The Pound has opened 2026 on the front foot against the Euro, rising last week to its highest levels since 12 September.
On 6 January, the Pound hit its highest level against the US Dollar since 18 September before losing over 1.2% by the end of the first full trading week of the year.
Analysts at Investec say the Pound will suffer from speculation over Keir Starmer’s leadership until at least the May elections, with 2026 tipped to become another year where Westminster infighting sparks City jitters. A note from the American bank Jefferies this week warned that Angela Rayner’s possible rise to Downing Street topped the list of concerns for banks in the UK. But analysts at the bank also said the probability of a Wes Streeting-Pat McFadden partnership in No 10 and No 11 respectively “could be viewed positively by the market”.
On Thursday, Bulgaria formally adopted the Euro and for the next six months both the Euro and the Bulgarian Lev will be legal tender. Bulgaria, a country with 6.8 million people, is one of the EU’s poorest countries and becomes the 21st member of the Eurozone. There are still six EU members whose currencies are not part of the Eurozone: Poland’s Zloty; Denmark’s Krone; Hungary’s Forint; Romania’s Leu; Sweden’s Krona and the Czech Republic’s Koruna. There are some in Bulgaria that fear the loss of their sovereignty and also the likely uptick in inflation that will inevitably accompany the adoption of the Euro.
This week, the key economic data releases include:
Monday China Broad Money (M2) and Lending
Tuesday US CPI Inflation & Home Sales
Wednesday China Trade Balance
US PPI Inflation & Retail Sales
Thursday UK GDP & Industrial Production
Friday Germany CPI Inflation
US Industrial Production
What’s in the news?
UK
A petition demanding Sir Keir Starmer call a general election has amassed more than 70,000 signatures. This is the third of its kind to call for a national vote since Labour swept to power in July 2024.
The author of the petition said that since he became prime minister, Sir Keir’s Government has brought in measures which no one voted for because they weren’t in Labour’s election manifesto. They added: “We believe we were misled and the obfuscation has only got worse since Starmer took power. It is time for action. We believe the Government has failed to defend our borders from the small boats. We have no confidence in the way this Government has acted. Pensioners and farmers have been directly affected by policies that were not included in Labour’s manifesto. Our country cannot go on like this. Dissolve Parliament and call a General Election now!”
Since Sir Keir entered Downing Street, his government has axed winter fuel payments for millions of pensioners and announced plans to charge farmers inheritance tax. Labour have U-turned on at least eleven policies amid fierce public backlashes. A previous petition calling for a general election led to a debate in Parliament on 6 January 2025 after it collected over three million signatures. The second petition calling for a general election is due to be debated in Parliament on Monday after it gained over one million signatures.
Starmer promised “nothing less than the complete re-wiring of the British state to deliver bold and ambitious long-term reform” after the 2024 general election. Instead, civil service headcount has reached a 20-year high, bigger than it was during Brexit or Covid.
Starmer’s government is considering a crackdown on second-home owners who register properties as holiday lets to reduce their tax bills. Currently, owners can switch from council tax to business rates if homes are available to rent for at least 10 weeks a year, often qualifying for small business rates relief that cuts liabilities to little or nothing. Nearly 80,000 holiday lets in England are registered this way. The Treasury is reviewing the system to close what it sees as a loophole, arguing some owners are managing tax rather than running genuine businesses.
Keir Starmer’s plan to foster closer economic ties with the EU is likely to exclude financial services after senior City figures pushed back against the reintroduction of EU regulations. Steven Fine, chief executive of investment bank Peel Hunt, told the FT, “The UK has made substantial progress on financial services reform over the past few years, and most regulatory lawyers will tell you that we have significantly less friction in our regulatory framework compared with most jurisdictions in Europe. You don’t want to create potential uncertainty just as the City is recovering its mojo.” Mats Persson, macro strategy leader at EY-Parthenon, told the FT companies “are seeing the benefits of the UK’s ability to regulate in a nimble and innovative way, particularly in relation to emerging technology and access to global markets”.
According to Bank of England data, credit card spending in the UK rose sharply in November, reaching nearly £78bn, the biggest increase since January 2024. The data also shows that borrowing using other forms of consumer credit, including car dealership finance and personal loans rose by £100m to £1.1bn.
New figures from Nationwide Building Society show that cash usage rose for a fourth consecutive year in 2025, with ATM withdrawals reaching a record £4.2bn. The total surpasses the previous peak of £4bn recorded in 2017 and underlines the persistent role of physical money in an increasingly digital payments landscape.
Good news
CEBR (Centre for Economics and Business Research) predict the UK will become the world’s fifth-largest economy by 2040, with GDP rising from just under $4trn in 2025 to $6.8trn. Slower growth in France and Germany is expected to allow the UK to overtake them, while Germany remains fourth and Japan falls to sixth. Globally, the US is forecast to remain the largest economy through the next decade. India is projected to become the third-largest economy by 2040, and Indonesia is tipped to enter the top ten by 2030. Despite stronger headline growth, the outlook for the UK is mixed. Living standards are expected to fall, pushing the UK down from 19th to 21st globally, partly due to government tax rises.
The Berne Financial Services Agreement came into effect on 1 January, enhancing cooperation between UK and Swiss financial firms. The deal allows firms to trust each other’s regulations, reducing costs and fostering innovation. Tim Focas, head of capital markets at Aspectus Group, says that outside the EU, Britain is able to operate on the principle of free market competition whereas the EU failed after years of trying to secure a deal with Switzerland. The Berne agreement signifies a shift from regulatory empire building to mutual recognition and should be seen as “a quiet Brexit win that actually matters.”
Not so good news
Analysts from the EY Item Club are warning that 2026 is likely to be another sluggish year for the UK economy, with limited policies to stimulate private sector growth.
The left leaning Resolution Foundation think tank is even more pessimistic, warning that the UK economy is showing signs of a ‘zombie apocalypse’ as years of tough trading conditions force thousands of unproductive firms to the wall. The warning comes after the share of jobs destroyed by closing firms reached its highest level since 2011 with the number of company insolvencies annually rising by 17% in October 2025.
The CPS (Centre for Policy Studies) said Labour is “quietly hammering” workers with taxes whilst those on the state pension reap the rewards through the triple lock agreement, which guarantees an income increase of at least 2.5%.
KPMG UK’s Consumer Pulse survey reveal that nearly 60% of Brits believe the economy is deteriorating, a significant rise from 43% in 2025.
The Adam Smith Institute say the UK national debt could soar to three times the size of British economy unless urgent action is taken to control spiralling welfare spending. According to the ASI, public debt will be 330% of GDP by 2075, higher than the 270% of GDP official estimates from the OBR (Office for Budget Responsibility). This is higher than after either world war, or at any point since records began in the 18th century. Debt was below 50% of GDP as recently as the early 2000s. The ASI said the large increase in debt could only be avoided if productivity improved and politicians made significant cuts to health and welfare spending.
Debt – Cosmos Currency Exchange
Cost burdens on firms rose at their fastest pace since May as bosses dealt with wage growth pressures and sky-high energy prices according to new data from the S&P Global’s latest purchasing managers’ index (PMI), a monthly survey tracking hundreds of companies’ performances.
Britain’s unemployment rate now rivals the EUs for the first time since the euro was launched in 2002 following a surge in joblessness under Labour. Martin Beck, chief economist at WPI Strategy, said successive tax rises and inflation-busting increases to the minimum wage under Labour had fuelled the rise in unemployment.
The BCC (British Chambers of Commerce) report that business confidence in the UK has declined, with only 46% of companies expecting increased sales, the lowest in three years. The survey, which included over 4,600 businesses, revealed that 63% cited tax rises as their main concern. Additionally, 72% reported rising labour costs as a significant pressure. Investment in machinery and equipment has fallen for five consecutive quarters.
Despite the government’s lofty pledges to be the “start-up hub of the world,” confidence has fallen so low that only 17% of owners would advise a young entrepreneur to start their business in the UK today according to a landmark survey of 1,150 family businesses and farmers conducted for the Jobs Foundation by Whitestone Insight. The report also states that 78% of family business owners are now pessimistic about the UK economy.
UK housebuilding is battling its deepest downturn since the pandemic, despite Labour’s pledge to build 1.5 million new homes by 2030. Unlike the broader construction industry, housebuilding continued to decline in December, according to new figures from S&P Global. The rating agency’s housebuilding subindex fell to 33.5 in December, down from 35.4 a month earlier and the lowest reading since May 2020, when pandemic restrictions triggered a sudden drop-in activity.
A government report reveals that 43% of businesses and 30% of charities experienced cybersecurity breaches in 2025. Notable victims include Marks and Spencer, Jaguar Land Rover, and Co-op Group.
Research for the Jobs Foundation reveals that 78% of family businesses in the UK are pessimistic about the economy in 2026. The survey indicates that many owners believe the current tax and regulatory environment is worse than that of the 1970s.
The UK’s new light commercial vehicle (LCV) market declined by 10.3% in 2025 according to the latest figures published by the SMMT (Society of Motor Manufacturers and Traders).
Nearly 70,000 households face significant increases in mortgage repayments this year, with costs climbing to over 4% as their below 2% fixed-rate deals expire.
Almost half a million customers were debanked last year, the highest figure in a decade, as account closures continued to spike. This was a more than tenfold increase on the 45,091 accounts closed in 2016-17, and an 11% jump on the 408,000 accounts closed in the 2023-24 tax year. There is no legal right to a bank account in the UK, unlike in countries such as France and Belgium. Banks have faced criticism over their failure to explain to customers exactly why accounts have been closed.
USA
President Trump made reducing the trade deficit central to his economic policy. New data shows the US trade deficit dropped in October to its lowest level since 2009.
The final US S&P Global Services PMI for December slipped to 52.5 from the initial 52.9. S&P noted that tariffs and rising labour costs pushed operating expenses to their highest level since May. Companies responded by raising prices more quickly to offset the squeeze.
US manufacturing activity dropped to a 14-month low in December. Prices paid held steady.
US payrolls rose by 50,000 in December, less than expected, but the unemployment rate fell to 4.4%. Average hourly earnings rose 0.3% for the month, in line with the forecast, although the annual increase of 3.8% was 0.2% higher than expected. For the full year, payroll gains averaged 49,000 a month, compared with 168,000 in 2024. Art Hogan, chief market strategist at B. Riley Wealth, said, “The jobs report is a mixed bag, with both positive and negative aspects. We continue to see an environment where companies are slow to hire and slow to fire. The overarching takeaway in today’s report is that there is more good news than bad in the first on-time jobs report in three months.
According to new Gallup polling, most US adults expect crime rates, prices, taxes, and unemployment to rise in 2026, while a majority also believe this year will be characterized by economic difficulty. Americans remain optimistic about one thing, with 55% believing the stock market will rise. While Republicans are more optimistic than their independent and Democratic counterparts across the issues polled, the negative shift from 2025 to 2026 was largely driven by growing pessimism among conservatives, a warning sign for the White House in a midterm election year.
The EU
Inflation across the eurozone eased to 2% in December, edging down from November’s 2.1% pace and landing on the ECB (European Central Bank’s) long-term target as price pressures have normalising after several turbulent years. The ECB is unlikely to cut interest rates further unless there is a deep slump in the European economy as it aims to keep borrowing costs steady in the coming months while closely monitoring the direction of travel. However, the softer inflation backdrop reflects an economy that is expanding only modestly, with consumer spending, industrial output, and cross-border trade showing signs of inertia.
The European Union’s carbon border tax came into force on the 1st of January, drawing criticism from trading partners while reaffirming the bloc’s green ambitions. The CBAM (Carbon Border Adjustment Mechanism) forces companies exporting aluminium, cement, steel, and other pollution-heavy goods into the EU to pay for their products’ emissions. The EU argues it levels the playing field against countries with more lax climate rules while advancing its environmental agenda. The policy, however, has been especially ill-received by major trading partners, particularly China and India, which regard it as protectionism cloaked in environmental rhetoric.
German exports unexpectedly fell while industrial output ticked up in November highlighting both the challenges Europe’s biggest economy faces globally and moderate improvement at home. German exports fell by 2.5% in November compared with the previous month, dragged down by declines in shipments to other European Union countries and the US.
Others
Chinese experts are broadly downbeat over the trajectory of the country’s economy in 2026. As exports boom, Beijing is trying to shift the drivers of its growth toward consumption, but analysts warn, “Don’t count on that happening” pointing to the deepening real estate crisis as prices crater. China’s services PMI edged down to 52.0 in December, signalling continued but slower expansion.
India expects its economy to expand more than previously expected, maintaining its status as the world’s fastest-growing major nation. The figures suggest the country is weathering trade tensions with the US. Remarkably, the central bank has cut its inflation forecast, pointing to something of a Goldilocks period in which growth is not accompanied by significant price rises.
Australia’s December S&P Global manufacturing PMI held at 51.6, below the expected 52.2, as new orders and output expanded more slowly. The sector stayed above the threshold between growth and contraction thanks to stronger domestic demand, while external sales remained weak. Business confidence improved, with firms hiring more and increasing purchases, signalling expectations of higher output in 2026. Australia’s services sector expanded at its weakest pace in seven months but stayed above the neutral 50 line.
Saudi Arabia is opening its stock market to all foreign investors from next month, part of the kingdom’s efforts to draw more capital and reduce its dependence on oil. Until now, restrictions stipulated that foreigners meet certain requirements, including managing at least $500 million in assets. But Saudi is trying to turn around its stock market, which saw a 13% drop last year, worse than other emerging-market peers as oil prices fell.
Iranian authorities cut off the internet and international calls, as protests gathered pace across the country. A collapsing rial currency and high inflation have led to crippling cost-of-living increases, and the resulting protests, which started on 28 December. Demonstrators have been chanting against the theocratic government. The country’s long-term challenges are severe. Iran has suffered brutal droughts, with reservoirs depleted to the extent that the president has said Tehran may have to be evacuated. The country’s longest river is largely dried up, and wildfires are consuming its ancient forests.
Commodities continue to surge with oil up nearly 3%, copper has broken all records and gold up over 4% so far this year. The price of silver has risen massively over the past year, seeing a value increase of almost 160% since the start of 2025 and a growth of over 30% in the past month alone.
Gold breaches $4400 while silver makes eyes at $70 – Here’s why…
Stranger than fiction
Scotland’s biggest offshore wind farm wasted 77% of the energy it produced last year after being paid hundreds of millions of pounds to switch off its turbines because there is not enough grid capacity to transport it to areas of the country where it is needed most.
Hundreds of electric buses on Britain’s roads could be remotely switched off by China with a “kill switch” according to officials at the Department for Transport and the National Cyber Security Centre. The findings will fuel concern about the level of Chinese control over British infrastructure, after calls from Labour MPs for Beijing to be shut out of industry, rail, water and power. Downing Street has instead pushed for more foreign investment from China, which ministers believe will boost economic growth and provide private sector capital for Labour’s green power plans.
Jellyfish sleep in a surprisingly human-like way, despite not having a central nervous system, suggesting that sleep predates the brain. New research on the species Cassiopea andromeda found that they reduce activity and sensory responsiveness for about eight hours, mostly at night, with a midday “nap.” Similar results were seen in a species of sea anemone. Sleep exists throughout the animal kingdom despite leaving many vulnerable to attack, suggesting it plays vital biological roles. The new findings bolster a theory that sleep is vital to neurons themselves, giving them time to repair DNA damaged during wakefulness.
A study of 34,000 high achievers found that, across various disciplines, those who achieved elite performance early on were not always the same people who reached pinnacles in adulthood. The researchers suggested that the prodigies specialized in a single discipline while later bloomers dabbled in multiple fields.
Quote
Winston S Churchill, “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”
