A storm is brewing in Nairobi, but the thunder is being heard in Threadneedle Street. As Kenyan protesters take to the streets over soaring fuel prices, the City’s financial mandarins are quietly recalibrating their risk models. The unrest, a predictable consequence of global oil volatility and a weak shilling, serves as a stark reminder of what the UK has: energy independence. Or rather, the closest thing to it in a world of fractured supply chains.
Let’s be clear. The UK’s North Sea reserves, combined with a pivot to renewables and a dash of nuclear, make us less susceptible to the kind of price shocks that are now crippling Kenya. But this isn’t just about energy. This is about the pound sterling, gilt yields, and the capital flows that keep our economy afloat.
Consider this: every spike in global oil prices is a tailwind for UK energy stocks, but a headwind for the consumer. The Bank of England, already wrestling with sticky inflation, cannot afford to ignore the inflationary impulse from higher petrol prices. Yet, unlike Kenya, we have the fiscal headroom to cushion the blow, thanks to a relatively diversified economy and a central bank that still has some credibility.
The Kenya protests are a live experiment in what happens when a country lacks energy sovereignty. Their currency is under pressure, their foreign exchange reserves are dwindling, and the government is forced to choose between subsidies and fiscal discipline. Sound familiar? It should. That was the UK in the 1970s, before North Sea oil transformed our fortunes.
Today, the lesson is clear: energy independence is not just a national security asset; it is a financial one. In a world of rising interest rates and capital flight from emerging markets, the UK’s ability to insulate itself from supply shocks is a competitive advantage. The market knows this. That is why sterling has held up better than most against the dollar, and why gilt yields, though elevated, are not screaming ‘banana republic’.
But let’s not get complacent. The Kenyans are protesting because the cost of living is eating into their disposable income. The same could happen here if the government loses its nerve on fiscal consolidation. The Chancellor must resist the temptation to splash cash to placate voters. A debt spiral is a far worse outcome than a few weeks of civil unrest 8,000 miles away.
Investors are watching. The IMF’s latest fiscal monitor warns that global public debt is near record highs. The UK is not immune. But if we can maintain our energy edge, and keep the fiscal ship steady, we can weather the storm. Kenya’s riots are a warning, not a prediction.
In the meantime, keep an eye on the UK’s energy sector. BP and Shell are likely to see their profits rise, but that will only fuel calls for a windfall tax. The market hates uncertainty, and the political calculus is fraught. The bottom line: energy independence is a geopolitical asset, but only if it is managed wisely. Otherwise, it is just another resource to be squandered.
