In the globalised economy of today, wars, elections or trade agreements can directly impact family budgets. Even far-off conflicts alter currency rates or commodity prices, appearing in prices for foodstuffs, energy, housing and more. Western expats managing several currencies experience these shocks intensely. Big geopolitical events can create tremors in currency markets, altering the value of the money in your pocket.
When politicians make unexpected moves or wars break out, investors tend to rush to safe-haven currencies such as the US dollar or Swiss franc, weakening currencies with ties to troubled areas. For instance, on the Brexit referendum night in June 2016, sterling fell more than 10% against the dollar and around 7% against the euro. UK expats abruptly discovered that their euros or dollars bought considerably less in Britain, and visitors to the UK must pay more for British products. It is not only Brexit – every unexpected election, tariff war or trade dispute can shake markets.
Analysts say US–China trade disagreements created “major fluctuations” in exchange rates. Practically, this may mean budgeting becomes far more challenging. If you work in one currency and spend in another, a large fluctuation can undo months of planning. A few expats reduce danger by using hedging instruments such as forward contracts or multi-currency accounts, basically converting uncertainty into predictability.
Energy prices and conflicts
Wars and sanctions have an immediate effect on energy prices, which then bleed into household bills. When Russia invaded Ukraine in early 2022, global oil and gas prices soared. Consumers worldwide paid far more for petrol, heating and electricity. Many oil-exporting nations are so-called petrostates that rely almost entirely on oil revenue; any swing in oil prices there can cause significant economic shockwaves. For example, in the UK, regulators warned that without government support the 2022 energy price cap would have risen by roughly 80%, a rise which consumers would have felt directly in their bills. Even talk of sanctions or new oil deals can move prices beforehand. For an expat relying on local transport or home heating, that translates quickly into higher petrol or gas bills.
Food and commodity costs
If staple commodities such as grain, vegetable oils or metals originate from a conflict area, prices can surge. Ukraine and Russia collectively export a significant proportion of the world’s grain and cooking oil, so sanctions and warfare pushed those prices sky-high. Western supermarkets experienced price hikes. In the UK, for instance, general food and beverage prices increased around 25% between Jan 2022 and Jan 2024. That translates to a £100 shopping basket at the beginning of 2022 costing around £125 two years later. Food inflation in the UK temporarily reached 19.2% in March 2023 (a 45-year high). The same surges were experienced by other Western nations. These price increases also contributed to headline inflation: UK CPI rose above 10% towards the end of 2022 as energy and food prices soared, a double-digit inflation rate that compressed many household budgets. Even now that inflation is easing, many expats still experience their supermarket and grocery bills as noticeably higher than pre-crisis.
Housing, mortgages and finance
Political shocks also feed into loan costs and interest rates. In response to increasing inflation (driven by those food and energy surges), central banks across the globe raised rates aggressively. For instance, the Bank of England’s base rate was just 0.10% in March 2020 but reached 0.75% by March 2022 and over 5% by mid-2023. Consequently, mortgage rates – which had been close to record lows, leapt. A typical two-year fixed mortgage rate in the UK rose from below 2% in 2021 to above 5% by late 2023. Even savings accounts now earn a little more interest, but expats on older low-rate deals have found their budgets stretched by increased borrowing costs. Meanwhile, the higher rates mean central banks want to tame inflation. Savers now receive a little more interest, but expats on fixed incomes or pensions might still feel the squeeze as prices went up.
Travel and daily life
Conflicts and diplomatic breakdowns can also surge travel and living expenses. Airlines tend to re-route or cancel flights when airspace becomes dangerous, adding fuel expenses and delays for travelers. For instance, following mid-2023 Middle East tensions, airlines suspended routes to impacted zones and aircraft took longer detours to circumvent conflict areas. Shipping is affected as well – one industry report mentioned Red Sea shipping insurance premiums doubled in mid-2025 following renewed attacks, a cost eventually passed on in higher import prices. Even brief flare-ups can have an impact: in October 2023 the Israel–Hamas war briefly sent Brent oil up ~4%, which is soon reflected in higher fuel surcharges on flights and shipping. In real terms, your vacation budget or daily commute can increase unexpectedly. Travel warnings can even increase insurance or staffing expenses for travel to sensitive areas. In brief, global instability means airline flights, shipping and imports can all be more expensive, with little advance warning.
Preparing and budgeting
The key for expats is not to panic but to plan. CurrencyTransfer’s research shows how quickly markets react – sending currencies swinging when politics turns turbulent. Analysts note that Brexit itself caused great fluctuations to the Pound and that sanctions on oil exporters directly drove up prices. While you cannot control global events, you can manage their impact. Consider fixing exchange rates with forward contracts or limit orders when you have a favourable rate, and keep savings diversified in multiple currencies. Build an emergency fund to cover sudden price hikes. For example, many expats split a large money transfer into smaller monthly payments to average out rate swings, or use automated alerts for a good rate. For more advice, see our guide Top tips for managing finances while living abroad. By staying informed and planning transfers in advance, you can cushion your budget against most geopolitical shocks.
Currency markets and local prices are influenced by a complex mix of factors, but the links above show how your everyday costs can be affected by events on the world stage. For expats, knowledge is power: understanding how global events feed into their costs can help you make smarter financial decisions. Staying aware and planning ahead helps expats keep control of budgets despite volatile headlines.
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Caleb Hinton
Caleb is a writer specialising in financial copy. He has a background in copywriting, banking, digital wallets, and SEO – and enjoys writing in his spare time too, as well as language learning, chess and investing.
