Governments & public sector industry trends
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Public sector industry trends 2026+
The public sector entered 2025 facing a crisis of capacity and credibility. Governments worldwide confronted simultaneous pressures that exposed the limits of legacy systems: climate disasters requiring rapid response, AI governance demands outpacing regulatory frameworks, and citizen expectations for digital services colliding with decades of underinvestment in infrastructure.
Over 60% of critical government IT systems now run on technology older than the workforce operating them. Yet 2025 also marked a decisive shift toward operational modernization.
Digital twins moved from urban planning experiments to live management tools for infrastructure networks. Estonia's AI-powered public services now handle 99% of citizen requests without human intervention, while Singapore's predictive analytics reduced emergency response times by 40%.
The pressure is structural: aging infrastructure, workforce retirements, and climate adaptation costs are converging just as tax revenues face headwinds.
The public sector organizations that will succeed in 2026 are those that treated 2025 as a forcing function not for incremental digitization, but for fundamental reimagining of how government delivers services, builds resilience, and maintains public trust in an era of compounding crises.
This public sector trend report explores the forces transforming governance, public service delivery, and long-term societal resilience.
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New and declining trends for 2026
The trends tracked in this year's report reflect how 2025 forced governments to prioritize operational resilience over aspirational programs. Trends dropped from our analysis as implementation reality diverged from policy ambition. Language accessibility and multilingual public services remain important, climate-integrated medical education proved too slow-moving when immediate healthcare capacity crises demanded faster interventions, and energy demand surges.
Upcoming trends are addressing immediate transformation: Integration of AI in regulatory compliance and policy analysis scaled rapidly as governments realized that human capacity couldn't keep pace with regulatory complexity. Digital inclusion as a social determinant of health emerged as critical when remote healthcare adoption exposed how connectivity gaps directly correlate with health outcomes. Emphasis on green infrastructure investment shifted from climate policy to economic necessity as aging systems failed during extreme weather, making resilience spending unavoidable rather than discretionary.
These changes reflect a public sector that moved from planning for transformation to managing it in real-time, where digital capability and climate adaptation are no longer future priorities but present operational requirements.
Administration and government services trends
The administration and government services segment is undergoing major shifts as public expectations rise and digital transformation accelerates.
Governments are investing in automation, AI-powered case management, and cloud infrastructure to streamline workflows, reduce bureaucracy, and improve citizen services. These innovations are helping public institutions do more with less - boosting responsiveness while maintaining accountability.
At the same time, rising cybersecurity threats, data privacy concerns, and workforce shortages are putting traditional systems under pressure. Political polarization and fiscal constraints are prompting a rethink of how governments plan, govern, and deliver services. Initiatives such as digital identity frameworks, agile procurement models, and one-stop citizen portals are helping modernize administration while keeping public trust at the core.
We highlight the three most critical developments shaping administration and government services below. Download here the complete list of all 100 trends, impacting the public sector in 2026 and beyond.
Adoption of Digital Identity Systems
Summary: Digital identity systems streamline access to public services, enhance security, and reduce fraud. They enable citizens to verify identity online and access government services. Privacy, inclusion, and interoperability remain key challenges.
Current Situation: Countries like Estonia and India offer comprehensive digital ID systems, enabling secure online transactions and remote service access. Others are piloting mobile ID platforms. Adoption improves efficiency and reduces fraud. Yet issues remain: data breaches risk trust, and marginalised citizens face access barriers. Fragmented identity schemes hinder interoperability.
Expected Development: Digital identity adoption will expand, supported by biometric verification, blockchain, and mobile-first platforms. Governments will develop privacy-first regulations and invest in outreach and digital literacy to ensure equitable adoption. Interoperability across agencies and borders will become a strategic priority.
Challenges: 1. Privacy and data protection, 2. Interoperability across systems, 3. Ensuring inclusive access
Time to Impact: 2-4 years
Potential Impact: Very High
STEEP Segment: Technological
This year’s trend development
Centralization of Executive Power
Summary: Governments are increasingly centralizing executive authority, often at the expense of legislative and judicial oversight. This trend is evident in various countries where leaders are expanding their powers through legal reforms and political maneuvers.
Current Situation: In recent years, there has been a noticeable shift towards the centralization of executive power in several democracies. Leaders are utilizing legal frameworks and political strategies to consolidate authority, sometimes undermining checks and balances.
For instance, certain administrations have implemented policies that reduce the independence of judiciary bodies and limit legislative scrutiny. This concentration of power raises concerns about democratic backsliding and the erosion of institutional integrity.
Expected Development: If this trend continues, it may lead to weakened democratic institutions and reduced public trust in governance. The balance of power could tilt further towards the executive, potentially resulting in policy decisions that lack comprehensive oversight.
To counteract this, there may be increased advocacy for institutional reforms and the reinforcement of checks and balances to preserve democratic norms.
Challenges: 1. Erosion of checks and balances, 2. Decline in public trust, 3. Potential for authoritarianism
Time to Impact: 2-4 years
Potential Impact: Very High
STEEP Segment: Political
This year’s trend development
Integration of AI in Regulatory Compliance and Policy Analysis
Summary: AI is increasingly used to support regulation and policymaking through predictive analytics and automated compliance checks.
This boosts efficiency and responsiveness but requires transparency, human oversight, and robust data governance.
Current Situation: Governments use AI to analyze legal texts, monitor compliance, and support regulatory enforcement. The EU has funded pilots for AI-based monitoring of environmental rules.
Benefits include faster response and data-driven policymaking. However, risks of algorithmic opacity, data misuse, and regulatory capture persist. The absence of uniform guidelines limits trust and adoption.
Expected Development: Use of AI in policy and compliance will deepen. Governments will invest in audit mechanisms, ethical oversight boards, and explainable AI. Training programs for civil servants will be scaled.
AI will be used to simulate regulatory impacts, anticipate fraud, and guide reform. Governance frameworks will be critical to public legitimacy.
Challenges: 1. Ensuring algorithm transparency, 2. Protecting sensitive data, 3. Balancing automation and judgment
Time to Impact: 2-4 years
Potential Impact: High
STEEP Segment: Technological
This year’s trend development
Health, education, and social services trends
The health, education, and social services segment is being reshaped by growing demand, rising inequality, and rapid innovation.
Public institutions are under pressure to deliver accessible, high-quality services while adapting to shifting demographics and limited resources.
Governments and service providers are embracing digital health platforms, AI-assisted diagnostics, personalized learning tools, and integrated social care systems to improve outcomes and expand reach. These technologies are enabling earlier interventions, better coordination, and more tailored support across vulnerable populations.
At the same time, mental health crises, workforce shortages, and regional disparities are testing the resilience of public systems. New models such as community-based care, hybrid education formats, and outcome-linked funding are emerging to fill gaps and drive transformation. Trust, transparency, and equity remain critical as institutions adapt to meet future needs.
We highlight the three most critical developments shaping health, education, and social services below. Download here the complete list of all 100 trends, impacting the public sector in 2026 and beyond.
AI Agents in Public Services
Summary: AI agents are evolving from simple chatbots to sophisticated systems capable of handling complex tasks with minimal human input. These agents are being integrated into various public services, enhancing efficiency and decision-making processes.
Current Situation: Modern AI agents, powered by large language models, can understand context, adapt, and execute complex functions. Their integration into public services is improving productivity and cost savings. However, challenges like data quality, legacy systems, trust, cybersecurity, and ethical concerns remain.
Expected Development: Over the next few years, AI agents will become more autonomous, handling a broader range of tasks in public services. Their evolution will lead to significant transformations in how services are delivered, though full autonomy is still a work in progress.
Challenges: 1. Ensuring data quality and integration with legacy systems, 2. Addressing cybersecurity and ethical concerns, 3. Building public trust in autonomous systems
Time to Impact: 4-6 years
Potential Impact: Very High
STEEP Segment: Technological
This year’s trend development
Youth Mental Health Crisis Response
Summary: The mental health of youth is a growing concern, with increasing rates of anxiety, depression, and other disorders.
Public services are expanding to address this crisis through school-based programs, telehealth services, and community initiatives.
Current Situation: Data indicates a significant rise in mental health issues among youth, exacerbated by factors like social media, academic pressure, and recent global events. Schools are often the first point of contact, leading to the implementation of mental health curricula and on-site counselors.
Telehealth platforms have also emerged to provide accessible support. Community organizations are collaborating to create safe spaces and programs tailored to young people's needs.
Expected Development: Future strategies will likely involve integrating mental health education into standard curricula, expanding telehealth services with youth-friendly platforms, and increasing funding for community-based programs.
Emphasis will be placed on early intervention, peer support networks, and destigmatizing mental health discussions among youth.
Challenges: 1. Ensuring equitable access to services across regions, 2. Addressing stigma associated with mental health, 3. Training sufficient professionals to meet demand
Time to Impact: 0-2 years
Potential Impact: Very High
STEEP Segment: Social
This year’s trend development
Digital Inclusion as a Social Determinant of Health
Summary: Access to digital technologies is increasingly recognized as essential for health, education, and social services.
Efforts are underway to bridge the digital divide, ensuring all individuals can benefit from online resources and services.
Current Situation: The shift to digital platforms in healthcare, education, and social services has highlighted disparities in access to technology.
Populations in rural areas, low-income households, and marginalized communities often lack reliable internet or devices. Recognizing this, initiatives are focusing on providing affordable broadband, digital literacy programs, and accessible technologies to ensure inclusive participation in digital society.
Expected Development: Moving forward, policies will aim to make digital access a fundamental right, with investments in infrastructure to reach underserved areas.
Public-private partnerships may emerge to provide devices and training. Additionally, services will be designed with accessibility in mind, ensuring usability for individuals with disabilities or limited digital skills.
Challenges. Funding infrastructure development in remote areas, 2. Addressing the affordability of devices and services, 3. Providing ongoing digital literacy education
Time to Impact: 4-6 years
Potential Impact: Very High
STEEP Segment: Social
This year’s trend development
Safety, defense, and justice trends
The safety, defense, and justice segment is being transformed by evolving security threats, technological disruption, and increasing demands for transparency and accountability. Public institutions are working to strengthen resilience while adapting to a world of hybrid warfare, cybercrime, and social unrest.
Governments and agencies are adopting AI-powered surveillance, predictive policing tools, digital evidence platforms, and automated case management systems to modernize operations and improve responsiveness. These technologies are enhancing situational awareness, accelerating judicial processes, and supporting better resource deployment across justice systems.
At the same time, rising concerns around civil liberties, data ethics, and institutional trust are shaping the public debate. Recruiting and retaining skilled personnel remains a challenge, especially as digital and cross-border threats grow more complex. Integrated emergency response systems, community policing models, and restorative justice practices are emerging to help meet the demands of modern safety and justice delivery.
We highlight the three most critical developments shaping safety, defense, and justice below. Download here the complete list of all 100 trends, impacting the public sector in 2026 and beyond.
Climate-Resilient Infrastructure for Defense and Public Safety
Summary: As climate change intensifies, defense and public safety agencies are prioritizing the development of infrastructure resilient to extreme weather events. This includes fortifying military bases, emergency response centers, and critical facilities to withstand floods, wildfires, and other climate-induced hazards.
Current Situation: Military and public safety infrastructures are increasingly vulnerable to climate-related events. For instance, rising sea levels threaten coastal bases, while wildfires endanger facilities in arid regions. Agencies are conducting assessments to identify at-risk infrastructures and are initiating projects to enhance resilience. However, funding constraints and the scale of necessary upgrades pose significant challenges.
Expected Development: Over the next 6–8 years, expect a surge in investments aimed at bolstering infrastructure resilience. This will involve public-private partnerships, adoption of green building standards, and integration of climate projections into planning processes. Success will depend on sustained funding, inter-agency collaboration, and community engagement.
Challenges: 1. Securing adequate funding, 2. Coordinating across agencies, 3. Integrating climate data into planning
Time to Impact: 6-8 years
Potential Impact: Very High
STEEP Segment: Ecological
This year’s trend development
Expansion of Executive Power in Law Enforcement
Summary: Recent political shifts have led to increased executive authority over law enforcement agencies. Initiatives like Project 2026 advocate for consolidating power within the executive branch, influencing the Department of Justice and federal law enforcement operations.
This centralization aims to streamline decision-making but raises concerns about checks and balances, civil liberties, and the politicization of justice.
Current Situation: The current administration has implemented policies enhancing executive control over law enforcement. For instance, Project 2026 outlines plans to restructure the DOJ, limit its independence, and expand the president's influence over federal agencies.
These changes are justified as efforts to combat crime and inefficiency but have sparked debates about the erosion of institutional autonomy and potential abuses of power. Critics argue that such centralization undermines democratic principles and the rule of law.
Expected Development: Over the next 4–6 years, the trend of expanding executive power in law enforcement is expected to continue, especially if supported by legislative changes and judicial appointments favoring executive authority.
This could lead to significant alterations in the balance of power among government branches, affecting the independence of law enforcement agencies. Vigilant oversight and public discourse will be crucial in maintaining democratic accountability.
Challenges: 1. Maintaining checks and balances, 2. Preventing politicization of justice, 3. Safeguarding civil liberties
Time to Impact: 4-6 years
Potential Impact: Very High
STEEP Segment: Political
This year's trend development
Next-Generation Emergency Communication Systems (NG911)
Summary: The evolution of emergency communication systems, known as Next Generation 911 (NG911), aims to enhance public safety by enabling voice, text, and video communication with emergency services. This transformation requires significant infrastructure upgrades and inter-agency coordination.
Current Situation: Traditional 911 systems are limited to voice calls, hindering effective communication during emergencies. NG911 seeks to modernize these systems by incorporating text, video, and data capabilities.
Implementation is underway in various regions, but challenges such as funding, technical complexity, and interoperability persist. The transition requires collaboration among multiple stakeholders, including government agencies, telecom providers, and emergency services.
Expected Development: Over the next 4–6 years, NG911 is expected to become more widespread, improving emergency response capabilities. Success will depend on securing funding, standardizing technologies, and ensuring interoperability among different agencies and systems. Public education campaigns will also be necessary to inform citizens about the new capabilities.
Challenges: 1. Funding constraints, 2. Technical interoperability, 3. Public awareness
Time to Impact: 2-4 years
Potential Impact: High
STEEP Segment: Technological
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This year's trend development
Infrastructure and utilities trends
The infrastructure and utilities segment is being transformed by climate pressures, digital innovation, and rising expectations for resilience and sustainability.
Public authorities are working to modernize essential systems while addressing aging assets, environmental risks, and growing service demands.
Governments and operators are investing in smart grids, predictive maintenance, digital twins, and decentralized energy solutions to improve performance and reduce downtime. These technologies are enabling more efficient infrastructure planning, real-time monitoring, and cleaner utility operations across water, energy, and waste systems.
At the same time, extreme weather events, cyber threats, and funding gaps are putting pressure on legacy infrastructure. Meeting future needs will require integrated planning, cross-sector collaboration, and new financing models. Nature-based solutions, circular design principles, and digital infrastructure upgrades are emerging as key levers for building systems that are more adaptive, inclusive, and climate-ready.
We highlight the three most critical developments shaping infrastructure and utilities below. Download here the complete list of all 100 trends impacting the public sector in 2026 and beyond.
Emphasis on Green Infrastructure Investment
Summary: Governments and financial institutions are prioritizing investments in green infrastructure to drive economic recovery and achieve sustainability targets.
Current Situation: The European Investment Bank and other entities are channeling funds into renewable energy, energy efficiency, and sustainable transport projects. This shift reflects a broader commitment to integrating environmental considerations into economic planning.
Expected Development: Green infrastructure investment is expected to accelerate, with increased funding directed toward projects that offer both economic and environmental benefits. This includes the development of smart grids, clean energy technologies, and sustainable urban infrastructure.
Challenges: 1. Aligning short-term economic objectives with long-term sustainability goals, 2. Overcoming technical and regulatory barriers to green project implementation, 3. Ensuring inclusive access to green infrastructure benefits."
Time to Impact: 2-4 years
Potential Impact: Very High
STEEP Segment: Economic
This year’s trend development
Methane Emission Mitigation from Abandoned Infrastructure
Summary: Abandoned oil and gas sites are significant methane emitters; addressing these is crucial for climate goals.
Current Situation: The IEA reports that emissions from abandoned fossil fuel sites now exceed those of some countries. Despite the environmental impact, cleanup efforts are hindered by high costs and limited economic incentives, with over 8 million sites needing attention.
Expected Development: In the coming years, policies and funding mechanisms are expected to be developed to incentivize the cleanup of these sites, reducing methane emissions and contributing to climate change mitigation efforts.
Challenges: 1. High remediation costs without immediate financial returns, 2. Lack of comprehensive data on abandoned sites, 3. Coordinating efforts across jurisdictions and stakeholders
Time to Impact: 6-8 years
Potential Impact: High
STEEP Segment: Ecological
This year's trend development
Smart Grid Modernization with AI and IoT
Summary: Utilities are integrating AI and IoT technologies to modernize the electrical grid, enhancing efficiency, reliability, and sustainability.
Current Situation: In 2026, utilities are deploying smart sensors and AI-driven analytics to monitor and manage grid operations in real-time. This modernization aims to accommodate renewable energy sources and improve demand response.
Expected Development: Over the next 6+ years, smart grids will become more autonomous, with advanced AI predicting and mitigating issues proactively. Integration with distributed energy resources will enhance grid resilience and flexibility.
Challenges: 1. Ensuring cybersecurity of interconnected systems, 2. Managing data privacy concerns, 3. Securing investment for widespread deployment
Time to Impact: 4-6 years
Potential Impact: Very High
STEEP Segment: Technological
This year's trend development
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