10 March 2026
In a speech at the World Economic Forum in Davos in January, delivered against a backdrop of rising tensions around the future of Greenland, Canadian Prime Minister Mark Carney warned of 'a rupture’.[1]
Following threats by US President Donald Trump to take over Greenland, a Danish territory, Carney’s comments underline the extent of the upheaval in international relations in the North Atlantic and feed a growing conviction that Europe can no longer rely on the US as an ally.
Markets endured a turbulent week, with risk assets sliding after President Trump announced new tariffs on a group of European countries, before abruptly changing course following the end to the latest bout of economic brinksmanship.
For Europe, the spat over Greenland reinforces the need to invest in strategic autonomy — across energy, defense, critical minerals, finance, and supply chains.
This period of disruption can also create opportunities for those able to take a long-term view. As Carney argued, middle powers can endure periods of systemic change if they can marshal institutional capacity and bolster their economic foundations. Europe, in particular, could play an important role: European households own nearly €40 trillion in financial assets and more than 32 million small and medium-sized enterprises currently operate in the world’s second biggest economy.[2],[3],[4]
For those looking to take a view on Europe, the question is whether the new rifts in global relations will stimulate investment and reinvigorate growth.
As policy priorities take shape, long-term investors may consider turning to to equity-backed financing to unlock funds, manage downside risk or monetize gains without sacrificing the long-term potential of their investments.
Can Europe deliver in 2026?
Last year, we stated in the immediate aftermath of ‘Liberation Day’, when the US government first raised tariffs, that efforts to build a more autonomous Europe could buoy equity markets and create wealth creation opportunities for entrepreneurs. Subsequent market performance lends credence to that view.
Among the world’s 20 best-performing equity markets last year, a significant number were from Europe. Hungary, Slovenia and the Czech Republic each rallied more than 60% in dollar terms.[5] The Stoxx 600 outperformed the S&P 500 as a stronger euro, renewed defense procurement, infrastructure spending and improving corporate earnings expectations helped re-rate European assets.[6]
Yet numerous factors must come together for Europe to maintain its path toward continued prosperity in the coming years. Europe must reduce internal barriers, deepen capital markets and act with greater strategic cohesion.[7]
Europe’s response to its economic challenges remains uneven. Policymakers broadly agree on the destination — a stronger industrial base, energy independence and improved trade prospects — but diverge sharply on the route.[8] Proposals to simplify regulation, finalize drawn-out trade deals or accelerate approvals for strategic projects have continued to run up against national interests and entrenched voting blocs.[9],[10],[11]
Even tariffs on Chinese or American imports affect member states very differently depending on export exposure, energy dependence and industrial structure, making consensus difficult.[12],[13]
Demographics compound the challenge. An ageing Europe needs labor and skills inflows to sustain growth, particularly in engineering, healthcare and advanced manufacturing.[14] Yet the political tide has turned against immigration across much of the continent, limiting policymakers’ room to maneuver just as labor shortages intensify.[15]
Europe is moving faster on trade. A long-awaited trade agreement with the Mercosur bloc appears close (even as it may face last-minute holdouts) while negotiations with India and select Southeast Asian economies are advancing.[16],[17] These deals could open new demand corridors for European machinery, chemicals and high-value industrial goods and, potentially, lead to high-skilled migration from a number of these countries.
However, smaller and mid-sized companies — the backbone of Europe’s economic ecosystem — continue to report difficulty accessing growth capital.[18] Banks, concerned over geopolitical and trade risks, remain slow to extend credit.[19]
This may leave many entrepreneurs short of the liquidity they need to capitalize on new opportunities as they emerge.
Reducing friction within Europe itself may be the hardest task of all. Intra-European trade fell for the first time since the pandemic as it was affected by rising energy prices, divergent standards and red tape that acts as a tax on growth.[20] Businesses need greater pools of working capital to endure the storms and realize the benefits of an integrated market.
But even as the sources of Europe’s malaise are well-documented, equity analysts are forecasting an optimistic outlook given fiscal plans, improving earnings and strong household and corporate balance sheets.[21]
If a rupture in the global order becomes a defining feature of the economic landscape, Europe may be uniquely positioned to benefit. Its heritage of democratic values, deep capital markets and globally trusted brands give it a foundation few other regions can match.
Businesses that are keen to build for a long-term European renaissance will need flexible funding and access to non-traditional capital. Equity-backed financing provides one way for entrepreneurs to unlock funding without surrendering long-term ownership or strategic direction.
The ‘Europhoria’ that briefly gripped markets last year may have faded, but the underlying impulse it revealed has not. Across governments, boardrooms and financial markets, there is growing alignment around the need for a stronger, more resilient Europe — one less exposed to external shocks and more confident in its own economic foundations.
In an increasingly volatile world, a stronger Europe could be an anchor for growth – both for the global economy and for long-term investment portfolios.
[1] https://paulwells.substack.com/p/the-carney-doctrine
[2] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Households_-_statistics_on_financial_assets_and_liabilities
[3] https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20241025-1
[4] https://www.imf.org/external/datamapper/NGDPD@WEO/EU/CHN/USA
[5] https://www.westadvisorygroup.com/european-markets-take-center-stage-in-2025/
[6] https://www.allianzgi.com/en/insights/outlook-and-commentary/european-equities-outlook-q4-2025
[7] https://www.reuters.com/markets/europe/2026-is-eus-make-or-break-year-economic-reform-2026-01-20/
[8] https://www.reuters.com/markets/commodities/europes-energy-weak-spot-reemerges-greenland-dispute-2026-01-21/
[9] https://www.ft.com/content/e9af68f2-2981-47a2-808d-49edf46e2db0
[10] https://www.ft.com/content/62819600-25bf-4881-800d-c215d394e44a
[11] https://www.euronews.com/my-europe/2025/12/10/european-commission-to-open-up-energy-infrastructure-law-to-speed-up-grid-permits
[12] https://www.euronews.com/business/2024/10/07/eu-navigates-china-trade-dilemma-defending-against-imports-courting-investment
[13] https://www.lemonde.fr/en/international/article/2026/01/21/von-der-leyen-seeks-talks-as-eu-parliament-divided-after-trump-s-tariff-threats_6749645_4.html
[14] https://www.eurofound.europa.eu/en/commentary-and-analysis/all-content/europe-must-adapt-its-ageing-workforce
[15] https://www.context.news/socioeconomic-inclusion/fortress-europe-what-will-migration-policy-look-like-in-2025
[16] https://economictimes.indiatimes.com/news/economy/foreign-trade/india-eu-trade-deal-set-to-conclude-in-next-few-days-spanish-minister-says/articleshow/126957535.cms
[17] https://www.reuters.com/world/asia-pacific/eu-advancing-trade-agreement-talks-with-philippines-thailand-malaysia-trade-2025-09-25/
[18] https://single-market-economy.ec.europa.eu/news/europes-small-and-medium-sized-enterprises-remain-ambitious-continue-face-persistent-hurdles-scaling-2025-07-02
[19] https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr251028~4288f66757.en.html
[20] https://www.ft.com/content/fbc7a2e8-0adb-494b-9a1e-267d06ebd446
[21] https://ninetyone.com/en/insights/2026-investment-views-european-equities-europe-is-finally-positioned-for-growth
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