INDEX 5 — Plasticity
11 – 15 May, 2026
How much plastic do you think you’ve bought in your life? Not a question that bears thinking about; it's a little sublimating. I know whenever I walk through a Poundland and see the sheer amount of poor-quality plastic tat for sale, I wonder just how much plastic we have used since the material was synthesised back in 1907. I also wonder just how much plastic we actually need; evidently, a lot. Computers, clothing, medical equipment, electrical infrastructure, vehicles, medicines – to put it simply, plastic is as ubiquitous as water. Handling it daily in an industrial workplace, its utility is undeniable – nonconductive, smooth, flexible, waterproof, mouldable, and (historically) cheap.
This week’s INDEX uncovers an emerging crisis in plastic prices. As supply chains fracture, we look at how the legacy of ZIRP-era (Zero Interest Rate Policy) ‘asset-light’ business models and an insubstantial British logistical infrastructure have left the UK bracing for impact. In contrast, we look to how state-led network sovereignty in Indonesia and Italy appear set to weather the storm. Further to this, we look beneath the $5 trillion global capex spike to ask whether the tech sector's present obsessions are delivering actual productivity, or merely erecting a mask to conceal a market trading on borrowed time.
(To settle your curiosity, one person uses about 150kg of plastic every year. If you measured that in plastic bottle caps, it would stretch the length of over 18 football pitches. So, yes, a lot.)
— S.E.P.
Capex Reaches ‘Historic’ Highs
It’s become a popular point amongst analysts to say we’re presently undergoing the largest capital expenditure (capex) cycle in history, reaching $5trn in 2026. Energy shifts make up the largest share, with $3-4trn involved in tearing down power grids in favour of renewables and nuclear power. This includes the Taipingling nuclear units in China, windfarms in the UK, and gas turbines in the US. The Treasury has made windfall of this capex spike, with positive growth in Q1 reported on Thursday.
AI hyperscalers make up the remaining $1trn, largely concentrated in data centres. Despite inflation, there is a genuine volume increase in orders: Gas turbine manufacturer GE Vernova is reportedly sold out until 2030; Caterpillar has reported major profits in its construction, mining, and power generation businesses; chipmakers like Nvidia continue to see soaring profits and price-setting power in the development of complex computer chips needed for hyperscaler data centres.
The question regarding overall AI productivity gains is now being more thoroughly interrogated, however. With capex reaching these historic highs and US inflation rising back to 3.8% this week, investors are looking for proof of RoI. This ‘proof’ has been found by the Financial Times to be being delivered by performance over at Amazon: ‘Tokenmaxxing’ is a leaderboard scheme at hyperscaler firms where employees are rewarded on how much they use AI tools on the day to day. Similar practices have also been found at Microsoft and Meta, with terms like ‘Claudemaxxing’ associated with other firms. There are two logics to tokenmaxxing: the first is to improve AI UI and working practices, as well as to train AI in programming tools. The second, and arguably more important for these hyperscalers, is overall proof of usage. If investors can be shown that productivity gains are being made alongside a high use of workplace AI, the data can be construed as correlative. But with an incentivised usage scheme like tokenmaxxing, this masks a potentially less optimistic reality. Indeed, tokenmaxxing incentives are high, with Meta CTO Andrew Bosworth reporting that top engineers at the firm were able to double their salary with a purported 5-10x increase in productivity.
Whether or not even 10x productivity gains can outpace the rate of capex – and the concomitant debt accrual – remains unclear, however. Whilst corporate capex on AI facilities has doubled since last year, this still only accounts for around 1.7% of revenue, a drop in the ocean compared to the towering sums being spent by hyperscalers. Only 7% of firms in the US have actually adopted AI programmes, and a May 2026 report found that 73% of all executives who have rolled out AI programmes found returns to be ‘underwhelming’. Further to this, it is reported that for the roughly 1 hour of productivity gained by AI rollouts, roughly 40% of that is then eaten back in having to double-check output, rendering software implementation redundant. One report found that AI implementation actually reduced productivity by around 19% due to double-checking; meanwhile, hyperscalers are engaged in aggressive land-grabs, energy investment, and infrastructure hoarding, which, while beneficial in the short-term for companies like British Land, EON, and Caterpillar, may never yield the productivity expected.
For the time being, this capex high is largely being flushed with cash, incentivised under the infrastructure and manufacturing tax-shield frameworks of the US ‘One Big Beautiful Bill’ and the UK’s SovereignAI fund. However, debt influx is inevitable as capex scales, and if hyperscalers are inflating overall productivity gains with tokenmaxxing, a market already trading at 23x forward earnings may find Q4 more than just underwhelming.
EON Takes Over European Energy Supply
German energy giant EON recently acquired a full stake in British energy company OVO. The acquisition comes as energy prices look to skyrocket in the face of the war in Iran, and smaller providers are seeking capital shields against a tough oncoming winter.
OVO was founded in 2009 as part of an effort to boost competition in an already very centralised energy market. It pitched itself as transparent, customer-first, and an early adopter of new renewable energy. By 2020, OVO had become one of the ‘Big Six’ energy firms controlling the majority of UK energy supply. When the energy shock from the 2022 Russian invasion of Ukraine hit, however, it did not have the balance sheet to bear the blow, and by 2025 had become a liability.
One of the biggest issues for OVO was its ‘asset-light’ model, a trend that emerged in 2010s as providers sought to develop less ‘heavy’ businesses by contracting infrastructure in from outsourced firms and simply acquiring the energy, reducing initial capex and providing high profit margins. As the energy crisis hit, OVO did not have the assets to cushion the blow, and were forced to trade at extortionate prices for the same quantities as the other Big Five.
Despite concerns around the reduction in market competition, OVO’s liability status is simply not something the British market can shoulder at the moment, making it highly likely regulators will waive through the acquisition. This is part of EON’s own model pivot towards becoming a continental distribution playmaker which is too big to fail, and something households continent-wide are dependent on for energy supply. The acquisition doesn’t involve the expansion of EON’s asset base, but it does expand its market share to around 25% of the total UK market, or 10mn households (giving it practical duopoly status with Octopus Energy’s 26% market share), allowing it to have a greater control over power usage in the UK to help provide greater predictability and data points for grid management. This comes with the high digital readiness of OVO households, transferring the capacity of the UK’s most advanced digital energy interface to a German energy company’s market and infrastructure intelligence. This process is taking place across Europe. In effect, EON is seeking to be the gatekeeper for all Europe-wide energy policy in the decades to come.
Plastic Resin Supply Crisis & Limits to Sovereignty
Plastic prices have seen major hikes as resin supply chains continue to be disrupted by the closure of the Strait of Hormuz. This is principally due to the core resin naphtha being unable to leave the region, causing major issues across the global supply chain. Plastics manufacturers in Europe are now stockpiling resin supplies; GEP Global Supply Chain Volatility jumped from 0.57 to 1.64 on Wednesday, with roughly 7mn tonnes of naphtha being held in the Middle East. Major chemical giants such as BASF and Ineos have begun declaring force majeure, shutting down operations due to shortages. Prices are expected to spiral into the consumer market by Q4.
Much like the growing aluminium crisis reported on in INDEX 4, Europe is the biggest loser in these supply chain issues. Indonesia serves as a vital counterexample to European paralysis in this case: Indonesia is a major importer of Middle Eastern naphtha, and the supply shock has severely threatened domestic plastic manufacturing there. In response to the emerging crisis, the Indonesian Trade Ministry sought alternative shipments from India and Africa, before settling on a rapid deal with the US to fill supply gaps, largely circumventing long-term instability for manufacturers. One of the key assets available to the government is the Pertamina procurement mechanism, which, as a state-owned energy giant, is capable of absorbing high shipping costs and ensuring market and local distribution through the state-owned CIVD – a centralised digital network through which all Indonesian vendors interface, allowing the state to track national inventory and mandate real-time raw material allocation. Danantara, a $900bn asset-rich national wealth fund which consolidates dividends from SOEs like Pertamina, is furthermore able to provide a capital floor for temporary price hikes and actively redirect funds to US markets on the command of the Trade Ministry, overcoming messy and expensive negotiations with private capital firms and creditors.
Europe, meanwhile, has struggled with sourcing alternatives. Regulations and aging manufacturing infrastructure across the private-sector in Europe mean that naphtha must be of a certain grade for manufacturing, a standard which US variants do not meet. For the UK, a lack of an active national wealth fund and dependence on private price-setters render the Trade Ministry effectively powerless, as manufacturers seek stockpiling over joint capex measures for long-term logistical safeguards and planning. The geologistics for Europe are further complicated, as discussed in INDEX 4, by the ongoing Russo-Ukrainian war, rendering potential alternative supply routes and naphtha providers out of bounds by sanctions. The UK and Europe will instead be forced to brace for impact as Q4 sees shortages and price spirals in commodities ranging from food to textiles to medicines and tools.
Italy’s Network Sovereignty: The ROLER Rail Project
In an interview for The Loadstar on Monday, Ben Fletcher, CEO of UK Logistics, made the case that UK policy does not account for the significant scale and development requirements needed for national logistics industry, as capital and policy focus remains squarely on energy and AI hyperscaling. Fletcher criticised government policy for being too focused on hyperscaling and manufacturing, whilst it dismisses logistics as “a niche… that needs to be regulated.”
A comparison suffices to demonstrate the paucity of logistical investment in this country: The Italians are making headway this week on a tremendously large-scale logistical development project called ‘ROLER’. Its primary objective is to double rail freight transport volumes through the strategic collaboration of several key stakeholders: SOEs like rail infrastructure manager RFI; private corporations like the Rail Traction Company (RTC); worker co-operatives handling goods at the Port of Ravenna and Bologna Interporto such as Gulliver, Solidarieta 90, and CNS; and the trade union triple alliance between the CGIL, CISL, and UIL. This is under a contract model known as a contratto di rete, or ‘network contract’. This unique Italian contract allows several smaller firms to overcome insufficient capital bases by agreeing to co-operate without resorting to quango formation or mergers. Partners are jointly responsible for the project whilst sharing labour and resources for the sake of project completion. This maintains a transparent financial ecosystem, allows smaller co-operative groups into industrial development programmes (vital in a region like Emilia-Romagna where co-operatives make up the bulk of the labour force), and provides a single framework for labour negotiations to take place within, rather than having to negotiate representation for several tiny sub-contractors.
ROLER intends to meet several key ambitions of government, private enterprise and workers, including meeting key EU net zero targets, having massive improvements for domestic and continental logistics with regard to Italian manufacturing, and reducing overall pollution levels. ROLER is especially significant for what it aims to achieve for the Emilia-Romagna region’s co-operative economy, where roughly one-third of all GDP is co-operative generated, and two-thirds of the citizens are member-owners of those capital gains, dispersed across various manufacturing, logistics, and legal networks that permit for regional specialisation and financial co-operation. Emilia-Romagna is well established as the industrial hub of the country.
The approach in the UK to logistics is accurately portrayed by Fletcher. Take the Freeport system, for example: These are SEZs plotted around the UK for the sake of attracting local investment, and at the Solent Port, some attempt has even been made in developing a ‘Collaborative Model’ not too dissimilar from a contratto di rete, though not as radical (amounting to a single steering group composed of local councils, ports, and universities). Nonetheless these are islands unto themselves, and there exists no legal instrument nor centralised SOE to coordinate infrastructural developments towards long-term national aims. Despite the talk from the government on long-termism, without substantial instruments to develop logistical capacity in the economy, this is largely restrained to consumer-facing outcomes and isolated examples, such as with Great British Railways and the to-be-nationalised British Steel (which amounts to a single facility). The biggest logistics news of the week came from Marks & Spencers, who announced the development of a logistics hub in Lichfield – yet another island of potential growth constrained from broader national uplift by lack of state investment – to say nothing of the role of worker groups like trade unions and co-operatives in these developments, which is practically nonexistent.
(Note – I do not prescribe the Indonesian or Italian models as bulletproof solutions or political endpoints, but examples of preferable, attainable solutions to emergent crises. Of course the heavy lifting of policy and costing in a structurally insecure UK is not ventured here, but I believe the examples given are of note for that process.)
INDEX Verdict
If asset-light capital is unsustainable, then an asset-light state is insecure. As workers, we cannot succumb to quietism, nor can we content ourselves with the defensive, short-term politics of the past. We must elevate our collective demands to the level of macroeconomic architecture. When regional leaders or political factions push toward network sovereignty – whether through centralised procurement interfaces or legally binding, collaborative contract models that unite state capacity with organised labour – workers must recognise, support, and actively drive these frameworks forward. Use your Trade Union leverage, your ballots, and your political structures to demand an end to fragmented private-sector islands. Networked sovereignty is the blueprint we must back to brace for the impact of Q4.