We started our guide by focusing on the uncertainty heading into 2026, and we have focused on using rolling budgets, scenario planning, and balance sheet flexibility to thrive in uncertainty. Those tools will be useful in any scenario.
Now, we are going to take our own advice of proactive guidance and review the broad trends poised to shape 2026 for CFOs in order to provide context to the budgeting process. As a note, from interest rates to labor costs to emerging technologies, the spread between best-case and worst-case outcomes is unusually large.
Let’s get to it.
Part 1: The External Macro Environment to Plan for
1. Interest Rates and Capital Markets
We are no longer in a zero-rate world, but most forecasts expect some easing in 2026. Current projections put the 2025 projections of Fed Funds rate at mid-3% and the ECB deposit rate at 2%. At the moment, the average yield on investment-grade corporate bonds is hovering around 5.0%. But, actually getting this money will still be tougher than before. Dealmaking shows bigger but fewer transactions, H1’25 M&A values up vs 2024, volumes down, still well below 2021’s record, and private credit remains a major (but more expensive) financing channel.
Recommendation: Do not count on significantly cheaper funding. Maintain capital buffers and build out multiple financing scenarios if you anticipate liquidity needs. Flexibility and cost control are the keys for 2026.
2. FX Volatility
Market volatility remains a defining feature of the landscape. In 2025, the USD/EUR shifted by nearly 17% over the past 52 weeks, demonstrating just how fast currency markets can move with ongoing geopolitical and trade tensions, 2026 is unlikely to see a return to stability.
Recommendation: Hedge significant exposures and review intercompany spending to naturally offset FX risk across countries.
3. Tariffs and Supply Chains
Tariffs remain highly uncertain. Planning should range from an upside of 10% to a downside of 25%. Certain industries face much sharper increases, including EVs (100%), semiconductors (50%), and solar (50%). At the same time, global supply chains will see near-term disruption as trade routes adjust, though this is expected to stabilize by year-end.
Recommendation: Plan for rising R&D and development costs as supply chains shift. Review your balance sheet to identify critical suppliers and secure backup sources, even at higher cost, to ensure continuity through potential disruptions.
Part 2: The Internal Levers to Pull
4. Cost of People and Inflation
Labor costs are projected to increase between 3–4% in 2026, closely tracking OECD inflation forecasts. This will put continued pressure on budgets but also creates opportunities to adjust pricing in line with broader inflationary trends.
Recommendation: Proactively build wage increases into your forecasts to retain top talent. At the same time, engage in early pricing discussions to determine whether to absorb lower margins or pass costs on to customers.
5. AI Evolution
AI remains in rapid development, with larger models dominating the landscape. While broad productivity gains have been limited so far, 78% of companies have said they are trying it out, the rollout of custom solutions across industries suggests that real impact is coming sooner rather than later.
Recommendation: Continue investing in workforce training and new tool exploration. You don’t need to commit to major spend immediately, but positioning your organization now will make adoption smoother when clear ROI starts to emerge.
6. Cybersecurity
Cybersecurity incidents continue to increase year over year, and reporting requirements continue to raise compliance and insurance costs further. What was once a background risk is now a consistent line item in the budget.
Recommendation: Frontload investments in cybersecurity defense rather than waiting for costs to escalate. Prevention remains significantly less expensive than dealing with an incident and proactive spend signals resilience to stakeholders.
7. Remote Work
Remote work has proven durable and is settling at around 30% of the workforce, though with variation by industry. This creates ongoing implications for office space, culture, and workforce management.
Recommendation: Embrace remote-first policies to remain attractive to employees. At the same time, re-evaluate real estate commitments, as consistently vacant office are expensive.
In Conclusion
Each of these forces carries a wide range of outcomes. Interest rates may ease, but tariffs may bite. AI may boost productivity, but cybersecurity costs will climb. FP&A leaders who build flexible plans and models across multiple scenarios will be best positioned to guide their organizations through 2026 with confidence.
To put yourself in the best position ensure you are building a scenario-filled rolling 2026 budget and protecting the flexibility of your balance sheet.
