Select Dividend '10 Surprises for 2026': #1 Global Reacceleration

Reaccelerating global economic growth could fuel inflation in 2026.

The Chinese economy is likely to benefit in 2026 from fiscal support while a PBoC put should help offset the property drag and lift growth. German fiscal stimulus is expected to boost spending and B2B flows in Q1, and we think the cleanest way to visualize the European re-industrialization is the amount of fiscal stimulus that's finally going to hit in 2026. We think the biggest challenge is not how to pay for it, but what to buy and that is likely to be a nice tailwind in 2026 for European equities.

Source: GlobalData TS Lombard St, Bloomberg as of 12/5/25.  * Direct development aid for the reconstruction of East Germany (“Aufbau Ost”). ** €500B in 12 years earmarked to “new projects”, €100B of which will go to an existing climate fund. *** Virtually uncapped. A 5% NATO target would imply €225B/year in annual defense spending, equivalent to ~3% of GDP

Rising U.S. goods inflation could be encouraged by consumers with extra cash.

The combo of refunds and lower withholdings will frontload the benefits of OBBBA into 2026. Policies including ‘no tax on tips’, and the increase in state and local deductions should quickly provide a measurable impact to a broad swath of taxpayers. Inflation may get stickier as the economy reaccelerates and the Government stimulates struggling low-income consumers. Additionally, markets seem to have priced out the Trump admin’s sweeping tariffs at this point, so to the extent that the Supreme Court formally strikes them down sooner rather than later, it should generate more confidence for corporates and consumers. The downside of a re-accelerating economy when inflation is already sticky, however, is that inflation possibly could tick up into 2026.

Source: Datastream, GlobalData TS Lombard as of 12/3/25.

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