After many years of mainly talk, the EU has grown more ambitious in the past two years, and this trend is accelerating in 2026. Last year, Europe's ambition was driven by an 800 billion euro defense investment plan, in addition to Germany rewriting its constitution to enable bigger government investments. But Europe's two most ambitious projects in 2026 are more structural than these spending programs. First, a trade deal with India - now the world's fourth-largest economy but trading little with Europe - that could open a massive market for European industry. Second, the Industrial Accelerator Act, which will introduce "Buy European" legislation directing EU procurement toward EU suppliers. The biggest challenge remains that some member states oppose projects that lower trade barriers (such as France), whereas others oppose projects that raise them (such as the Netherlands). However, given the current momentum in Europe and the highly uncertain geopolitical situation, the probability that both projects advance is significant. If they do, this could contribute to European stock markets' continued outperformance versus the US, as in 2025.
