Political unrest and renewed US shutdown risk push capital into gold silver and bitcoin what the market shift means for the UK economy in 2026
Written by Frode Skar Financial Journalist.
Financial markets entering 2026 are increasingly shaped by political instability, both geopolitical and domestic. A potential new shutdown of the US federal government, combined with rising tensions around immigration enforcement and global security, has triggered another broad risk-off move. Capital is flowing away from equities and high-risk assets and into perceived safe havens such as gold, silver and, increasingly, bitcoin.
For the UK economy, these developments matter. As a globally connected financial hub, the United Kingdom is highly sensitive to shifts in global risk appetite, currency flows and monetary policy expectations.
US political conflict and shutdown fears
The immediate catalyst for the latest market volatility is the growing risk of a US government shutdown. Following a fatal incident involving immigration authorities, Democratic lawmakers have threatened to block a major funding bill, potentially halting large parts of the federal government.
Previous shutdowns have shown how quickly liquidity can dry up when government spending is paused. Risk assets tend to suffer, and bitcoin has repeatedly demonstrated its sensitivity to changes in global dollar liquidity.
Geopolitics and declining global confidence
Beyond domestic US politics, tensions with European allies are adding to market anxiety. Disputes over trade, security commitments and territorial issues have weakened diplomatic trust, reinforcing investor caution.
For the UK, this environment increases volatility in currency markets and raises uncertainty around cross-border investment flows.
Gold and silver surge as capital seeks safety
Gold and silver have emerged as standout performers in 2026. Prices have surged as investors seek protection from political risk, inflation concerns and financial instability.
Unlike previous episodes, these metals are not merely holding value but delivering strong gains, accelerating the rotation out of equities and risk assets.
Bitcoin under pressure yet quietly accumulated
Bitcoin has declined alongside other risk assets in the short term, with heavy liquidations across the crypto market. However, long-term holders and institutional investors continue to accumulate, viewing current prices as attractive entry points.
This pattern mirrors previous cycles, where heightened uncertainty preceded periods of recovery once liquidity conditions improved.
Central banks liquidity and interest rates
The next phase will depend heavily on central bank policy. Upcoming Federal Reserve meetings, inflation data and signals around future rate cuts will shape investor expectations.
For the UK, shifts in global monetary conditions directly influence gilt yields, sterling exchange rates and domestic borrowing costs.
Implications for the UK economy
Heightened global risk aversion can weigh on UK growth through weaker investment and tighter financial conditions. At the same time, stronger commodity prices and a flexible exchange rate may cushion some sectors.
Households and businesses alike face an environment where financial planning must account for greater volatility and geopolitical uncertainty.
Our assessment
The 2026 rotation into gold, silver and bitcoin highlights deep concerns about political stability and global liquidity. Investors are positioning defensively, anticipating further shocks.
For the UK, this underscores the importance of resilience, diversification and cautious policy choices as global markets navigate an increasingly unstable landscape.
