The World Is Getting More Unstable. Here Is What the Evidence Shows — and What to Expect

The number of active armed conflicts worldwide is at its highest level since the end of the Cold War. Major power competition between the United States, China, and Russia is reshaping the global order that has structured international relations since 1945. Energy markets are volatile, supply chains have been disrupted repeatedly, and democratic institutions in several countries face sustained pressure. For British households and businesses, the practical question is not whether geopolitical instability matters — it clearly does — but how it translates into their daily lives and what, if anything, can be done about it.

The Structural Shift: From Rules-Based Order to Multipolarity

The post-1945 international order was built on a set of institutions — the United Nations, WTO, IMF, World Bank, and NATO — designed to manage great-power competition through rules and multilateral negotiation. That order is under significant strain. The United States, its principal architect and guarantor, has shown increasing ambivalence about multilateral commitments under successive administrations. China has grown to the point where it can credibly challenge American primacy in Asia. Russia has demonstrated willingness to use military force to redraw borders in Europe.

The result is an increasingly multipolar world in which the rules that previously constrained state behaviour are less reliably enforced. This does not mean that conflict is inevitable — multipolarity has existed before without producing global war — but it does mean that the risk premium on geopolitical stability has risen.

The Key Fault Lines in 2026

Taiwan and the South China Sea

The Taiwan Strait remains the most consequential single flashpoint in the global system. Taiwan produces approximately 90% of the world's most advanced semiconductors. A conflict — or even a credible threat of conflict — over Taiwan would disrupt semiconductor supply chains in ways that would be felt within weeks across every economy that depends on advanced electronics manufacturing, which is to say nearly all of them.

The probability of an imminent Chinese military invasion of Taiwan is assessed by most Western intelligence agencies as low but non-trivial, and rising over a 10-year horizon as China's military capabilities continue to develop. The more immediate risk is economic and diplomatic coercion short of armed conflict.

Middle East Energy Risk

The Strait of Hormuz — through which approximately 20% of global oil trade passes — has experienced periodic disruption in recent years. Any sustained closure or serious threat to shipping in the Gulf would push oil prices sharply higher. Britain, which imports the vast majority of its oil and is exposed to global gas prices through its LNG import infrastructure, would see immediate increases in petrol prices and energy bills.

European Security Architecture

Russia's ongoing conflict with Ukraine has fundamentally altered European security assumptions. NATO members have significantly increased defence spending, and the UK has committed to raising its own spending to 2.5% of GDP. This has direct fiscal implications — money spent on defence is money not spent on the NHS, schools, or public infrastructure — and reflects a genuine reassessment of the risk environment that Britain faces.

What Historical Precedent Suggests

Periods of elevated geopolitical tension have historically been associated with higher commodity price volatility, more fragmented supply chains, and greater government intervention in strategic industries. They have also, over multi-decade periods, tended to resolve — either through negotiated settlements, through the exhaustion of one or more parties, or through the emergence of new institutional frameworks that manage competition more effectively.

The academic literature on great-power competition — from scholars including John Mearsheimer, Graham Allison, and Hal Brands — consistently finds that the transition between hegemonic orders is the most dangerous period. We appear to be in such a transition. But the history also shows that catastrophic outcomes are not inevitable and that the quality of statecraft on all sides matters enormously.

What Individuals and Households Can Reasonably Do

The honest answer is that individuals have very limited ability to insulate themselves from major geopolitical events. But there are reasonable steps that financial advisers and risk analysts consistently recommend as prudent regardless of the specific threat environment.

Diversification of savings and investments across asset classes and geographies reduces exposure to any single point of failure. Maintaining an emergency fund — typically three to six months of essential expenses — provides buffer against sudden income disruptions. Paying attention to energy efficiency reduces vulnerability to energy price spikes. And staying informed about policy developments, through reliable sources that separate fact from speculation, enables better-calibrated decision-making.

The risks that seem most remote are often the ones worth thinking about precisely because they are under-planned for. The Covid-19 pandemic, the 2022 energy crisis, and the 2008 financial crisis all seemed improbable before they happened and obvious in retrospect.