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Taking advantage of the upcoming year end, we have prepared our traditional Dossier analysing the trends and key elements that will determine the behaviour of the economy in 2026. First, we analyse the resilience of the global economy to the tariff storm and the challenges it faces in a future that will continue to be marked by geopolitics, precisely one year after Donald Trump’s victory in the US presidential election. In the second article, we address the European challenge of reducing public debt amid the need to invest in defence, innovation and the green and digital transition. Next, we focus specifically on the outlook for the US economy, which is facing the new year with a mix of strength and vulnerability. Finally, we quantify the forecasts for the Spanish economy, which has shown better-than-expected dynamism in recent quarters in an adverse international context.

The military conflict in Iran has reintroduced a significant source of uncertainty into an economic context which, until recently, had been showing notable resilience. The closure of the Strait of Hormuz and the resulting rise in energy costs necessitate a recalibration of the macroeconomic scenario, both globally and for the Spanish economy. In this edition of the Monthly Report, we present our updated forecasts for 2026 and 2027, analysing how this geopolitical episode is impacting financial markets, the international economy and the Spanish economy. The report is supplemented with other analyses of interest, such as the new (im)balances in the oil market; the impact of the inflationary spike on European households’ well-being; the exposure of Spain’s economic sectors to the energy shock; the persistence of the generation gap in income and wealth, and the challenges facing the public accounts and compliance with European fiscal rules.

In the May issue of the Monthly Report, we include a special dossier to analyse the present and future of the new AI economy, addressing its macroeconomic, business, financial and geopolitical implications. We begin with an overview of the global deployment of AI from a supply-side perspective, analysing the value chain, the role of infrastructure, energy and semiconductor bottlenecks, and the position of different powers in this technological race. We then examine how AI could drive productivity growth, as well as what we know – and do not know – about its effects on employment, emphasising that the leap from microeconomic improvements to macro impacts will be gradual and uneven across countries and sectors. In Spain, AI adoption by firms is advancing rapidly, but remains limited and uneven, posing significant challenges for productivity and for the cohesion of the economy’s productive base. We also address AI governance strategies in the US, China and the EU, and the balances between innovation, regulation and adoption that will shape AI geopolitics in the coming years. Finally, we cover AI in financial markets, the valuations of big tech firms and the risks associated with high concentration and the growing investment needs in infrastructure.

This month we explore in depth the impact and implementation of the Next Generation EU funds in a new Dossier. We begin with an analysis of the status of the implementation of these funds at the European level, followed by an assessment of their impact and future challenges. Next, we examine how they are being managed in Spain, highlighting both current achievements and future expectations. We also address investments beyond NGEU, which are necessary in order for Europe to adapt and thrive in an environment as demanding as the current one. Finally, we compare the US model of economic transformation with the European approach.

We are living increasingly longer and healthier lives – excellent news for all of us. However, this longevity, combined with a persistently low birth rate, is reconfiguring the demographic structure of our societies. In our latest Dossier, we analyse this important demographic shift, as well as its impact on growth, public finances, and savings and interest rates. We also analyse in depth other topical issues, such as the adjustment of the ECB’s monetary policy strategy and operational framework, the European Union’s 2025-2028 budget and the feasibility of it increasing defence spending to 5% of GDP. In the sphere of the Spanish economy, we lay out the causes of departures from employment and the evolution of the incomes of the middle class in recent years.