2025 was expected to offer respite after the unprecedented electoral changes around the world in 2024. Instead, we experienced more geopolitical shocks, challenges and risks. For business, as well as government and civil society, geopolitics became an everyday strategic consideration with supply chains, capital allocation, regulatory risk and reputation all shaped by unstable domestic politics, cross-border issues and shifting global power.
New governments elected on high hopes quickly found themselves overwhelmed. Starmer, Merz and Macron saw support at home erode as foreign crises displaced domestic priorities. Trump’s return to the White House ushered in a new era of transactional diplomacy and further weakening of multilateral institutions. Meanwhile, his pursuit of headline peace deals in the Middle East, Ukraine and Africa, have done little to shift realities on the ground.
The US and China asserted power in different, and often conflicting, directions, while the EU struggled to protect the liberal order. Accelerating US–China decoupling and a continued retreat from multilateralism forced global firms to navigate a world of shifting and often inconsistent international standards. Russia remained globally and economically diminished, but strategically disruptive as its invasion of Ukraine continued to shape European security, inflation and global energy markets. Countries outside these poles were forced into complex recalibration. Europe accelerated its push for defence autonomy; Asian economies advanced de-dollarisation; and African nations faced declining American aid and shifting development partnerships.
In this new world order, economic policy and national security have become intertwined. Tariffs, export controls and investment screening became standard tools of statecraft. Businesses responded by restructuring supply chains, balancing resilience, political exposure and cost. Inflation eased somewhat, but remained stubborn, driving wage pressures and fraying social fabric, not least as citizens felt poorer and blamed governments. Populist movements in Europe gained support across the spectrum, fuelled by this economic uncertainty and cultural division. Rising costs of living triggered unrest in Africa and the US saw “No Kings” protests directed at perceived executive overreach. In this environment, corporations faced increased exposure to political reputational risk and needed to balance messaging on social issues to employees, customers and shareholders.
AI-driven misinformation on social media intensified polarisation and rapidly emerging new use cases raised moral and ethical questions. With the US, EU and China adopting incompatible frameworks, companies faced fragmented compliance and ethical expectations, while competing to embrace AI-driven innovation. Meanwhile, cyberattacks escalated as geopolitical instability intersected with rising capabilities among criminal groups and rogue states. Major breaches in the UK at Jaguar Land Rover and M&S underscored the vulnerability of corporate infrastructure.
While AI adoption and use of technology surged, climate initiatives stalled. COP30 delivered no major breakthroughs, and though emissions may have peaked, progress toward net zero slowed. Businesses faced a backdrop of uncertain policy trajectories as they pursued emerging opportunities in adaptation technologies, clean energy and nature-based solutions. Governments may have cooled, but media and civil society still demand progress and employees, customers and stock markets demand real green credentials and practice.
Around the world, business faced common themes, but the regional picture varied.
Asian economies navigated the ripple effects of evolving US trade and monetary policy, while domestic politics shifted—particularly following elections in Japan and several Southeast Asian nations. Investor confidence in the Asia markets and business models remained strong, signalling belief in the region’s long-term growth potential despite the turbulent global environment. Similarly, the GCC carefully balanced its international relationships and maintained a robust investment climate. Looming conflict in cross-Straits between China and Taiwan – the World’s largest chip manufacturer – could change that confidence in the region and globally.
Australia’s dominant Labor government pushed ahead with major reforms while managing persistent inflation and debates over nuclear policy tied to AUKUS. Japan achieved a period of political stability under Prime Minister Takaichi, drawing strong foreign investment into real estate, data centres, financial services and tourism. South Korea avoided more domestic drama, but continued to worry about an unstable nuclear neighbour.
Europe saw Poland and the Netherlands usher in new governments, while Spain and Italy struggled to contain coalition tensions. In Germany, Chancellor Merz pursued a strategy centred on greater autonomy, expanded defence spending and announced a €500 billion infrastructure and climate fund, steps that began to redefine expectations around fiscal policy and national competitiveness. The European Union announced new initiatives under a new five-year mandate, and coalesced around security. But the lack of a Franco-German motor has impacted strategic cohesion and output that affected business confidence.
In the United States, economic nationalism led to “America First” reshoring incentives and tighter immigration rules, creating labour cost pressures. Political polarisation fuels an unpredictable policy landscape, with executive actions and regulatory changes (e.g. environmental standards, antitrust enforcement) facing frequent shifts depending on the strength of the administration’s deregulatory interests at any given moment.
Global volatility in 2025 placed geopolitics firmly on the boardroom agenda, demanding a new approach to value creation and protecting firms’ license to operate. Chaos and disruption are the new normal. None of the challenges have been fully resolved.
2026 will therefore extend the dynamics of 2025. Persistent conflict, fractured alliances, technological disruption, climate stagnation and political polarisation will continue to redefine global business environment. Companies will need Public Affairs national, regional and global advice. H/Advisors is here to help clients defend and grow their business in a fast moving, ever-changing and complex world.
Top 10 geopolitical concerns for 2026 and beyond
- Conflict: Middle-East, China-Taiwan, Russia-Ukraine
- Climate change
- Geo-economic/inflation
- Migration/multiculturalism
- Pandemics/public health
- Criminal activity/terrorism
- Social media/culture wars/truth
- Multipolar world/tariffs/rule of law/supply chain
- Technology/AI
- Civil unrest: Far right or left/issues-based protests
Damion Potter
Executive Chairman of Public Affairs, H/Advisors, London
and
H/Advisors Public Affairs team