Happy new year... but look out for financial bombshells

Interest-rate cuts might have offered brief respite, but 2026 could deliver yet another brutal lesson in history repeating itself. Chris Blackhurst warns of the dangers lurking ahead

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Interest rates came down again, which was a heartening end to 2025. Looking at the next 12 months, though, there is a real case for crossing fingers and toes.

Why so? Because so much remains fragile and volatile. There could be the implosion of the AI bubble, in which case, all bets are off - so much money has been committed to the technology’s development, in one headlong rush, that the fallout may be deep and long-lasting, dwarfing the dotcom era’s demise.

Likewise, there could be a private credit collapse, which would evoke memories of another crisis: that of 2008. The parallels are uncanny - as they are between AI and dotcom. But there is one major difference, which is that the amount of cash written off would be far greater.

In both AI and private credit, the levels of funding tied up are off the scale. Some of it is solidly based, some is not. As ever, the desire to get in on the action, to not miss out, to make a killing, has been so overwhelming as to prompt investors to throw their usual caution out of the window. That’s exactly what occurred with dotcom, and with the banking meltdown.

Let us hope history’s habit of repeating itself does not apply on this occasion. What is depressing, writing this, is the knowledge that the dotcom bubble blew apart in 1999, and credit dried up nine years later. Here we are heading into 2026, and the possibility of a repeat is very real. Our ability to not learn, to ignore and to forget, is frightening.