Market predictions for 2026: Will Dubai introduce an income tax?

1. An IPO boom

The number of listed companies has declined relentlessly over the past 20 years. In London, the number of stocks has fallen from 2,448 in 2013 to 1,800. The numbers in New York have fallen from a peak of 7,000 in the 1990s to around 4,000 now, and there have been similar declines across most of the major exchanges. But 2026 is going to see some blockbuster initial public offerings (IPOs). OpenAI, Anthropic and SpaceX are all likely to float at values of $500 billion-plus. In the wake of that, there will be a huge appetite among investors for new issues. Entrepreneurs with businesses to sell will be quick to take advantage, and so will the private-equity firms that have plenty of companies on their books that they would like to sell off. The result? An IPO boom.

2. German giants move to China

We have already seen lots of major European firms move to the US. But surely the world’s second-biggest economy has its attractions as well? China is growing at 5%-plus a year, has hundreds of millions of increasingly wealthy consumers and has deep capital markets. Many of Germany’s biggest companies are already heavily dependent on China. About 30% of Volkswagen’s and Mercedes-Benz’s sales are made there. Many of the chemicals and engineering giants are just as dependent. With trade barriers going up between the West and China, firms may have to choose one side or the other. When you look at the numbers, China may be the better bet. You’d have to compromise with the regime in Beijing, but it could make commercial sense – a lot more sense than relying completely on declining domestic sales.

3. Asda and Morrisons merge

The determination of private-equity houses to buy second-tier British supermarket chains in the early 2020s was baffling at the time. A few years later, one point is clear. It has not worked out well. TDR Capital is now the majority owner of Asda, after a £6.8 billion takeover in 2020, but since then the chain has struggled to maintain market share. Morrisons is now owned by Clayton, Dubilier & Rice after a £7 billion deal in 2021 and has, likewise, performed poorly ever since. The UK grocery market has become brutal. A super-efficient Tesco dominates the mass market, Waitrose and Marks & Spencer control an affluent niche, while the German discounters Aldi and Lidl snap away at the cheaper end of the market. At the same time, the government keeps imposing extra costs and burdens. Worse, with a stagnant economy and with taxes rising all the time, sales are hardly healthy. There is only one real fix if the buy-out firms are to have any hope of getting their money back. Merge the two companies to create a new chain with roughly 20% of the market, and start cutting costs.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

4. Dubai introduces income tax

People might be moving there for a better job, to start a business, or just for the sun and lifestyle. But all of the tens of thousands relocating to Dubai every year are also cutting their tax bills. Yet it turns out that running a state without any significant taxes is harder than it looks. As it grows, there are debts to be serviced, infrastructure to be paid for, while the native population expects more generous welfare. The UAE has already introduced a modest corporate tax. In 2026, I predict it will impose its first income tax. It will be low at first, perhaps about 5%, and probably only levied on incomes above $100,000. Even so, British expatriates are in for a shock.

5. The rise of Great British Vehicles

We already have Great British Railways and Great British Energy, and half the steel industry has been taken into state ownership. Our government is keener on nationalisation than any of its predecessors since the 1970s. The only real difference is it now puts the word “Great” into the branding, presumably on the grounds that we might otherwise not notice how “great” the firms are. Meanwhile, the car industry is in deep trouble. It faces the highest energy prices in the world, and the UK, for now at least, is sticking to an absurd target to ban new petrol cars from 2030 onwards, even as the target is pushed back elsewhere. The solution? The government will have to step in to rescue the manufacturers before they close down. Welcome to Great British Vehicles, a state-owned manufacturer, making electric cars that are hugely pricey, don’t work, and no one wants. Britain’s journey back to the 1970s will be complete.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.