Europe finds its footing as the US fixates on AI

Europe has entered 2026 in healthy shape, with household balance sheets remaining strong, inflation easing, and unemployment low. However, growth across the continent remains uneven, with Belgium, France, Italy and Spain tackling debt-to-GDP ratios of over 100%. Germany, on the other hand, is returning to growth and is beginning to spend big. The ambitious Next Generation EU plan is also helping activity in peripheral countries within Europe. In the US, growth has become increasingly dependent on a narrow base of AI-driven capex. Five hyperscalers plan to add $2 trillion of AI-related assets...