2026 will not be remembered as a year of grand policy announcements. It will be remembered as the year delivery became a political liability.
The UK enters 2026 under cumulative pressure rather than acute crisis. Fiscal headroom remains narrow. Public services are brittle. International instability continues to intrude on domestic priorities. And across the electorate, tolerance for promises that do not translate into visible improvement in daily life is wearing thin.
For the Labour Government, the defining question has shifted. It is no longer What do we want to do? but What can we realistically deliver within existing budgets, legislative capacity and political tolerance?
For business, this matters profoundly. Political attention, funding, and regulatory tolerance will be rationed. Policy ambition will be filtered through execution risk. Effective engagement will increasingly accrue to those who can help government demonstrate progress or avoid visible failure.
This analysis piece sets out the key political and policy dynamics that will matter most in 2026. Taken together, they point to a year in which delivery becomes the decisive test—and where those able to align with government priorities, constraints, and risk appetite will be best placed to shape their operating environment. Here are eight significant forces that will shape UK politics and policy in 2026.
1. Geopolitical permacrisis and the UK’s constrained power
What is changing
The global system is no longer punctuated by crises; it is defined by them. Political conflict, economic fragmentation, and climate shocks now reinforce one another, creating a condition of permanent instability, or permacrisis, rather than episodic disruption. The assumptions that underpinned globalization—predictable rules, enforceable norms, and efficiency over resilience—no longer hold. For governments and businesses alike, volatility is not an external shock to be managed but a structural feature of the operating environment.
What to watch
Despite a long-term decline in relative influence, the UK continues to punch above its weight on European security, particularly on Ukraine, under Keir Starmer. This leadership role comes at a moment when the UK must navigate an increasingly delicate triangle—a more transactional and less predictable United States, a cautious but indispensable EU, and an international system where informal power often matters more than institutions.
The risk is strategic overstretch. As the rules-based order that has amplified UK influence for decades continues to fracture, the UK faces a difficult question: How far can it shape outcomes rather than merely respond to them?
Why it matters
The outcome of the war in Ukraine will shape European security for a generation. UK security assessments are clear: Russia represents a persistent and adaptable threat, with escalation always possible. As a mid-sized power outside the EU but inside NATO—with a nuclear deterrent and a UN Security Council seat—the UK retains influence, but only if it is willing to invest politically, fiscally, and institutionally at home. For business, this translates into sustained geopolitical exposure: higher defense spending, tighter security regulation, and a less predictable external environment that increasingly takes up political bandwidth and constrains domestic policy choices.
2. The end of economic ambiguity: growth, living standards, and fiscal reality
What is changing
Prime Minister Starmer tells us 2026 is the year the UK economy is going to turn the corner. That means it is the year where the space for economic ambiguity will narrow sharply. The public wants evidence of rising living standards, not simply stabilization after a period of turbulence. With high borrowing, high stocks of debt and interest rates, though falling, much higher than for most of the period since the financial crisis, the government’s capacity to use fiscal measures to change the situation are highly limited. Economic performance will move from context to center stage, with growth, wages and household pressure becoming the primary lens through which government competence is judged at home and so will steer its policy interventions.
What to watch
Headline growth and inflation figures grab the attention. But keep an eye out for employment figures and productivity growth. Are people moving into better-paid, more secure work? Are supply-side reforms shifting the long-term growth trajectory? If the government can shift these then it will be in line to surprise on the upside. The Spring Statement on March 3 will be another moment of heightened tension where the government’s record on the economy and public finances will, once again, come under the microscope. Coming just weeks before local elections, it will expose the gap—or alignment—between fiscal reality, political ambition, and economic delivery.
Why it matters
This is where the Labour Government’s economic credibility will be most directly tested. If growth and living standards disappoint, the political debate will shift quickly from arguments about inheritance to questions of choice—what to tax, what to spend, and what to reform. On the other hand, if the government’s theory of Political Economy is meaningful and accurate then results should begin to materialize. How the government navigates trade-offs between short-term delivery and longer-term structural reform will shape not just its economic record, but its broader authority going into the second half of the Parliament. For business, the direction of travel on tax, regulation, and reform will increasingly be shaped by delivery pressure rather than ideology.
3. State capacity as the central political faultline
What is changing
A quieter but more consequential question is moving to the center of British politics: Does the state still have the capacity to deliver? Under sustained fiscal, geopolitical, and demographic pressure, and rising demand, core systems—from the NHS and local government to transport and justice—are operating with little or no slack. Public frustration manifests itself in the personal or hyperlocal experience: Do appointments happen on time? Do my council run services properly? Has that pothole been fixed? These symptoms point to deeper structural fragility which must be addressed before failures become crises.
What to watch
While NHS performance will remain politically dominant, strain is likely to intensify elsewhere: courts, prisons, local authorities, and universities all represent under-acknowledged pressure points. Local government finances, in particular, risk becoming a recurring national issue as service reductions and emergency interventions expose systemic weakness. At the same time, efforts to drive public-sector productivity, through pay restraint, automation and reform, will face both operational and political resistance.
Why it matters
Visible delivery is the currency of political authority. A Labour administration elected to “fix” the state now risks being constrained by the weakened condition of the very systems it must use to deliver change. If improvement is not evident, ministers will face rising pressure to demonstrate action quickly, often through interventions that prioritize speed and optics over structural reform. Failure to show meaningful improvement also creates space for populist alternatives that promise to disrupt and challenge the status quo—a dynamic already visible on the political fringes. For business, this raises the likelihood of abrupt policy shifts, reactive regulation, and a less predictable operating environment.
4. Devolution and the return of territorial politics
What is changing
After a period of Westminster’s dominance of the UK’s political agenda, 2026 will bring a sharper focus back to the UK’s territorial politics. Elections to the Scottish Parliament and the Welsh Senedd, alongside English local authority elections (including the whole of London) and the continued rollout of devolution deals in England, will shift attention towards how power and responsibility are actually exercised across the country.
What to watch
The rise of the fringe parties—the fragmentation of the traditional two-party system is accelerating. Reform and Plaid Cymru look set to become by far the largest parties in Wales, making Labour a tiny part of the political landscape they dominated for more than a century. Reform are set to eclipse the Conservatives in Scotland, and Labour—who were confident of winning a year ago—could slip to third. Labour’s dominance in London could end with pressure from the Greens as well as the other main parties.
In Scotland, the central question is whether constitutional debate resurfaces or whether the campaign is shaped instead by public services, economic performance, and trust in government. In Wales, the first election under a reformed Senedd will test new institutional arrangements and could alter coalition dynamics and policy influence. In England, directly elected mayors will continue to grow in importance—not just as partners for central government, but as political actors in their own right, with increasing visibility and leverage.
Why this matters
Policy delivery on housing, infrastructure, energy, and health will continue to increasingly sit outside Westminster. Political divergence will complicate any notion of a single “UK-wide” approach. For businesses engaging government in 2026, understanding where power lies, where decisions are made, and how priorities diverge by place will be essential. Political volatility at the sub-national level will increasingly shape national policy choices. And if Reform does make the successes that the polls predict, its proposition as an alternative government will only increase.
5. Leadership, opposition, and political volatility
What is changing
Almost two years since the General Election, a central issue for political leaders is whether they command authority. With the immediate post-election period over, expectations around delivery, coherence, and political grip are hardening. For the Government, this means sustaining discipline while rebuilding and broadening support. For the Opposition, it means translating positioning into credible policy.
What to watch
Keir Starmer’s leadership is under huge pressure. That doesn’t necessarily mean it will translate into a direct leadership challenge. His political strategy is questioned and his capacity to set direction and follow through on it is doubted by many of his party and natural supporters. A year of delivery in 2026 will have to mean a new approach to political management—not just “better communications” but also a clearer sighted setting of objectives, priorities, and outcomes.
On the Opposition benches, Kemi Badenoch’s task is to rebuild the Conservatives with sharper analysis of what the public wants and why the Conservatives were rejected so dramatically in 2024. While confidence has grown, clarity on policy positioning and electoral strategy remains elusive. And of course, from the outside, Nigel Farage and Reform are moving from a pressure group to an established party of local government and a serious contender for power. Could this be the year that the perennial populist outsider becomes the front-runner for power?
Why it matters
Leadership dynamics shape policy risk. How the political field reshapes will directly affect the policy choices the government chooses to make. Pressure from the left on delivery and public services, combined with fragmentation and competition on the right, will influence where ministers focus their political capital and how bold they feel able to be. Devolved and local election results will feed into this calculation, shaping perceptions of risk and reward and, ultimately, the direction and pace of policy.
6. The UK–EU relationship moves from reset to hard choices
What is changing
The UK–EU relationship is moving beyond symbolism into substance, with the prime minister signaling moving closer to the EU Single Market, on a sectoral basis. Following the May 2025 UK–EU Summit, attention will turn to implementation and leverage rather than intent. At the same time, limits to cooperation are also becoming clearer, with the collapse of SAFE negotiations and a more politically charged review of the Trade and Cooperation Agreement now approaching.
What to watch
The pace and substance of implementation of the 2025 summit agreements will be an early test of whether the reset translates into tangible outcomes for business and government, or stalls amid familiar institutional and political friction. The failure of the SAFE talks will sharpen questions about where deeper cooperation is realistic, particularly in sensitive areas such as security, defense, and industrial policy. Alongside this, the TCA review will become an increasingly important focal point, forcing choices about regulatory alignment and market access.
Why it matters
As the relationship moves from rebuilding trust to exercising leverage, trade-offs will become harder to defer and more exposed politically. Decisions taken in this phase will shape growth prospects, supply chains, energy policy, and security cooperation, often outside the spotlight of headline politics. For businesses, shaping the operating environment will depend on understanding not just the direction of travel, but where implementation risk sits, where negotiations have stalled, and how EU-facing decisions intersect with domestic political constraints.
7. Trade, tech, and geopolitical exposure
What is changing
In an era of persistent geopolitical instability and a more transactional relationship with the United States, the UK’s exposure to global shocks is becoming faster, more direct, and harder to buffer domestically. Trade policy will continue to look beyond Europe, but it will be shaped less by market access ambitions than by strategic alignment, supply-chain resilience, and political risk. At the same time, technological change, particularly in AI, is moving decisively from future opportunity to present governance challenge. As AI becomes embedded across the economy, it is no longer treated as a discrete digital issue, but as a cross-cutting risk that cuts across competition, labor markets, ethics, data governance, and national security. This shift will pull technology policy into the center of mainstream economic and political decision-making.
What to watch
Expect renewed momentum behind trade and investment relationships with the Gulf states and other strategically aligned partners, reflecting a pragmatic effort to secure capital, energy links, and growth opportunities in a more fragmented global economy. These relationships will be framed less around liberalization and more around stability, co-investment, and long-term alignment. In parallel, pressure to move from principles to practice on AI regulation will intensify. As regulatory frameworks begin to harden, attention will shift from headline commitments to questions of enforcement, liability, and accountability. Businesses should expect growing scrutiny not just of compliance, but of how AI systems are governed in practice, including data provenance, risk management, and decision-making transparency.
Why it matters
Trade, technology, and geopolitics are no longer separate policy domains; they now intersect directly with domestic economic and regulatory choices. External shocks, from geopolitical escalation to supply chain disruption, can rapidly constrain fiscal headroom and force reprioritization at speed. Meanwhile, decisions taken on AI and emerging technologies will shape the UK’s competitiveness, investment climate, and growth trajectory for the next decade. For business, this creates a more volatile and politicized operating environment. Policy decisions will increasingly be taken under time pressure, sometimes with limited consultation and a heightened focus on risk. Organizations that understand how global pressures translate into UK political decision-making—and that can demonstrate credible governance, resilience, and alignment with national priorities—will be better positioned to manage exposure and sustain influence.
8. Net zero, energy, and infrastructure politics
What is changing
Net zero and infrastructure are no longer framed primarily as long-term ambitions; in 2026 they become a test of whether the government can translate strategy into delivery. Political debate is shifting from targets and commitments to outcomes that are immediately visible to households and businesses: energy prices, security of supply, housing availability, and progress on major projects. These issues now sit at the intersection of economic credibility, state capacity, and political risk. As fiscal constraints tighten and public tolerance for delay diminishes, ministers will be forced to prioritize projects that can demonstrate momentum and manage cost, even where this requires compromise on pace, sequencing, or design.
What to watch
Energy policy will remain a focal point, particularly where affordability, security, and decarbonization pull in different directions. The government’s ability to reconcile these tensions, through market reform, investment frameworks, and regulatory decisions, will be an early indicator of its delivery credibility. Planning reform and housing delivery will provide a second, highly visible test. Progress will depend less on headline legislation than on whether the government is willing to confront local opposition and streamline decision-making in pursuit of national objectives. At the same time, infrastructure bottlenecks, notably in grid capacity, transport and digital networks, will expose the gap between strategic intent and execution capability. The evolution of industrial strategy will also matter, particularly where it links net zero investment to jobs, supply chains, and regional growth. How clearly these trade-offs are articulated—and who is asked to bear the cost—will shape both political support and investor confidence.
Why it matters
This is where delivery failure is most visible and politically costly. Delays, cost overruns, or stalled projects quickly translate into higher bills, constrained growth, and reduced investor confidence, undermining not only net zero objectives but the government’s wider economic and reform agenda. Conversely, credible progress on energy and infrastructure offers one of the few areas where the government can demonstrate competence at scale. For business, this creates both risk and opportunity. Those able to reduce execution risk, accelerate delivery, or align projects with national and local priorities will find a more receptive policy environment. Those perceived as adding cost, delay, or complexity will face greater political and regulatory scrutiny as delivery pressure intensifies.
Materials presented by Edelman’s public & government affairs experts. For additional information, reach out to Alex.Moore@edelman.com.
