Had a random thought last night, got curious on how the U.S. Profits from political instability in France and the UK

Political instability in France and the United Kingdom has created economic and strategic opportunities for the United States. From capital flight to increased reliance on U.S. financial and military sectors, the ripple effects of European turmoil have positioned the U.S. as a major beneficiary.

Capital Flight to U.S. Markets

UK Equity Fund Outflows: Since the Brexit referendum in June 2016, investors have withdrawn nearly £100 billion from UK equity funds. Much of this capital has flowed into the U.S. stock market and Treasury bonds, which are seen as safer alternatives during political uncertainty.

Impact on U.S. Markets:

• The U.S. dollar strengthens as it becomes a safe-haven currency.
• Increased demand for U.S. Treasury bonds stabilizes the American economy.
• Wall Street benefits from an influx of European capital seeking security.
  
  

  

  Signage is seen outside the Blackstone Group headquarters in New York City, U.S., January 18, 2023. REUTERS/Jeenah Moon/File Photo

 

U.S. Asset Managers Expand in Europe

As trust in European financial institutions wavers, American asset management firms have gained influence.

• British Airways and Shell have transferred pension assets to BlackRock, the largest U.S. asset manager.
• BAE Systems has hired Goldman Sachs for financial services, reinforcing the dominance of U.S. banking firms in Europe

With London’s post-Brexit decline as a financial hub, New York has increasingly become the preferred location for European financial operations.

Currency Valuations and Trade Advantages

British Pound Decline: Following Brexit, the pound sterling fell to its lowest level against the U.S. dollar since 1985, making American exports more competitive in the UK market.

Eurozone Weakness: Political uncertainty in France, including strikes and protests, has also weakened the euro. This has led to:

• More favorable exchange rates for U.S. businesses trading with Europe.
• Increased U.S. tourism revenue as European travelers seek a stronger dollar.
• Greater U.S. influence in EU economic policy.
  
  

Geopolitical Influence and NATO Leadership

With France and the UK experiencing domestic instability, the U.S. has strengthened its role in NATO.

• France’s protests and economic struggles have slowed President Macron’s push for “European strategic autonomy.”
• The UK’s Brexit turmoil has reduced its ability to act as an independent power, increasing its reliance on the U.S. for diplomatic and military support.
• NATO allies, wary of security threats from Russia’s invasion of Ukraine, have increased their defense budgets—leading to higher purchases of U.S. weapons.

Military and Defense Industry Profits

With European instability, NATO countries have been pressured to increase defense spending, benefiting the U.S. arms industry.

• The F-35 fighter jet program has seen record sales to European allies.
• Lockheed Martin, Raytheon, and Boeing have secured billions in contracts as European nations invest in American-made weapons.
• France and the UK, facing internal challenges, have struggled to develop independent defense industries, further increasing their reliance on U.S. military export

 

FILE PHOTO: Elon Musk speaks as his son X ? A-12 and U.S. President Donald Trump listen in the Oval Office of the White House in Washington, D.C., U.S., February 11, 2025. REUTERS/Kevin Lamarque/File Photo

U.S. Gains from European Weakness

While the U.S. has not actively caused instability in France or the UK, it has undoubtedly benefited from the situation. The economic and geopolitical gains include:

• Capital inflows into U.S. financial markets.
• Increased American business dominance in Europe.
• Stronger U.S. influence over NATO and European defense policies.

As long as France and the UK remain politically unstable, the U.S. will continue to solidify its economic and geopolitical advantage on the global stage.

Now, since Russia launched its full-scale invasion of Ukraine on February 24, 2022, Kyiv has pushed for NATO membership as a long-term security guarantee against future aggression. However, some NATO members, including the U.S., remain hesitant to admit Ukraine while the war is ongoing.

In an interview published on February 7, 2024, by The Economist, President Volodymyr Zelensky stated that if Ukraine is not allowed into NATO, the country will have to build its own military force comparable to Russia’s as a "Plan B." He emphasized that achieving this would require significant military and financial assistance from the U.S. "If Ukraine is not in NATO, it means that Ukraine will build NATO on its territory," Zelensky said, stressing the need for continued Western support.

 

French President Emmanuel Macron accompanies U.S. President-elect Donald Trump and Ukraine's President Volodymyr Zelenskiy as they leave after a trilateral meeting at the Elysee Palace in Paris as part of ceremonies to mark the reopening of the Notre-Dame de Paris Cathedral, December 7, 2024. REUTERS/Christian Hartmann