Notes

Cost of living crisis: How the war in Ukraine is eroding living standards in the UK
Russia also produces other commodities, notably metals, that are essential for a range of supply chains. The combination of these is likely to substantially reduce Russia’s trade volumes, particularly imports. Given that direct links between the UK and Russia are very small, however, the spillover effect on the UK economy is likely to be minimal.

Soaring energy costs and supply chain disruption caused by Covid have driven inflation to the highest levels in three decades. Any disruption to flows would quickly ripple through to buyers globally, raising costs for bread and meat. Although Russia accounts for a relatively small share of the global trade in goods, rising energy prices are expected to further push up factory costs after issues caused by Covid-19. Gemma Tetlow, chief economist at IfG, says that there are potential opportunities for UK producers in markets like barley, wheat and gas. This could see states like Poland and the Baltics decide to aid Ukraine on their own, which "might leave NATO's eastern front vulnerable and cause a crisis within the EU and European NATO".
"Renewables have a distinct security of supply advantage in that they don't require refuelling," explains environment expert Antony Froggatt. She also predicts a rapid short term boost to energy efficiency efforts across Europe, which would reduce energy demand. With war raging in Ukraine, many fear ministers will be distracted from climate action. Many companies are now making the decision to leave Russia, due to the difficulties inherent in operating under sanctions, deep uncertainty about Russia’s economic future, and reputational concerns.

How do higher energy prices affect inflation?
A far bigger problem for the UK will be the indirect effects from price rises and volatility in commodity markets – particularly energy. The Ukraine conflict prompted a further revisiting of the 2021 ‘integrated review’ into foreign, security, defence and development policy. In line with the spirit of that pre-Russian invasion period, the original document was titled “Global Britain in a competitive age”. But beyond the Johnsonian rhetoric the 2021 document was quite clear-sighted about UK interests. It pledged to support an “open and resilient international order” but warned that “to be open we must also be secure” and of increasing competition between states and a fragmented international order.

Russia has been backing a bloody armed rebellion in Ukraine's eastern Donbas region since 2014. Despite the share of renewable energy increasing 11-fold over this period, the share of gas and oil in energy consumption has remained reasonably stable at 73 per cent owing to declining coal and nuclear power (Chart B, top-right panel). When asked about these comments, Mr Wallace said Mr Lavrov was "a master at these types of engagements and making those type of comments", but that there had been no deafness or blindness in his talks with Mr Shoigu. Moscow says it cannot accept that Ukraine - a former Soviet republic with deep social and cultural ties with Russia - could one day join the Western defence alliance Nato and has demanded that this be ruled out. The bounce back in the economy in January was not just stronger than expected, it was also seen in buoyant tax revenues.
Even with prices falling faster than expected, next winter still looks challenging – and energy is likely to remain front and centre of the political agenda well beyond that. In the meantime, individual countries including the UK are supplying Kyiv with money and weapons and helping to train its armed forces. British diplomats said Mr. Cameron and other senior officials had made it a priority to reach out to Republicans who were hostile to further aid.

Although Russia accounts for a relatively small share of the global trade in goods, rising energy prices are expected to further push up factory costs after issues caused by Covid-19. We have also not made any explicit adjustments for the domestic consequences of international sanctions on Russian financial institutions or individuals, beyond what might be reflected in equity prices in the fiscal forecast. We do not assume these actions have a material effect on overall financial stability, lending, or investment in the UK. So far, however, the UK, US and EU have refrained from imposing financial sanctions that would directly disrupt gas and oil trade, although there is evidence that some traders are reluctant to deal with Russian suppliers. Gazprombank, which is part owned by Russian energy giant Gazprom and acts as a key bank for Russia’s energy conglomerates, has so far been excluded from the SWIFT ban. Trade between the two is small relative to the size of either economy and Russia is not closely integrated in the global financial system.

In his speech Jon Cunliffe talks about the impact that the Russian invasion of Ukraine has had on the UK economy and on UK financial stability. He discusses what implications this could have on monetary policy, and gives an assessment on the resilience of the financial system. For https://anotepad.com/notes/7s76973j has heavily relied on Russia's oil and gas, generating money and cash for Russia. But Russia is also reliant on revenues from fossil fuel sales, which make up around two fifths of government revenue. The UK, along with the US and EU, announced that some Russian banks would be excluded from SWIFT, the widely used global inter-bank messaging network that enables cross-border transactions.

Putin's intent
However, Russia’s invasion of Ukraine – and sanctions imposed as a response by the UK and its allies – could still have a significant impact on the UK economy. But one industry body warned the UK faced a higher risk of recession as the impact of the Ukraine conflict would add to the sharp rise in living costs. While climate change is often deemed a "threat multiplier", it is clear from the last week "that fossil fuels are a threat multiplier too", she said.


It could even send troops to the three Baltic countries - Estonia, Latvia, Lithuania. Many analysts fear war in Ukraine could potentially spill over into other European countries. Russia wants Nato to make a legally binding promise that Ukraine will never become a member.


Some migrants might stay in neighbouring Poland and eastern European countries, but some might head further west and eventually end up in the UK. Nato powers are already promising to build up their own forces in the alliance's eastern flank. Russia might use the crisis to launch cyber and other hybrid attacks on Nato countries.

He added that the government had "provided unprecedented support" throughout the Covid pandemic, "which has put our economy in a strong position to deal with current cost of living challenges". However, Russia’s invasion of Ukraine – and sanctions imposed as a response by the UK and its allies – could still have a significant impact on the UK economy. Over the Christmas period, Russia launched hundreds of missile and drone strikes across cities in Ukraine including Kyiv, Odesa, Kharkiv, Dnipro and Lviv. The COP talks are designed to give all countries an equal seat at the table, with anyone able to block progress, although these days few want to be perceived as great disruptors. But Russia is also reliant on revenues from fossil fuel sales, which make up around two fifths of government revenue.
This explainer looks at the direct trade links that do exist between the UK and Russia, and two key areas of the UK economy most likely to be exposed. Prior to Russia's invasion, the Foreign Office had seen a decline in its Russia expertise - despite the government having described the country as "the most acute threat to our security" in the Integrated Review. The muted response to Russia’s invasion of the Crimea in 2014 had already shown that, as a former UK ambassador to Moscow and Washington put it, “there was a problem in the Foreign Office; the old Cold War cadre of people just wasn’t there”. The new Department for Energy Security and Net Zero is tasked with plotting the UK’s course out of the crisis.

Boone said the OECD had cut its global growth forecast for 2022 from 4.5% to 3%, while inflation in the organisation’s 38 wealthy-country members would average almost 9% – double the forecast in last December’s Economic Outlook. The economy grew by 0.8% compared with a 0.2% contraction in December the Office for National Statistics said. The Home Office’s initial response was criticised for being slow and bureaucratic, as the department’s overriding instinct to prioritise control, and security won out over pressure to get refugees into safe UK accommodation quickly. The talks between Mr Wallace and Mr Shogiu were the latest in a period of frenzied diplomacy intended to defuse the current crisis in eastern Ukraine. Despite limited dependence on Russian imports, surging global prices are expected to erode living standards even further.
The Home Office’s initial response was criticised for being slow and bureaucratic, as the department’s overriding instinct to prioritise control, and security won out over pressure to get refugees into safe UK accommodation quickly. The same failure to ‘see the face behind the case’, to take a compassionate approach to service delivery and to balance competing priorities contributed to the Home Office’s failings in the Windrush scandal and lay behind its subsequent transformation programme. UK food prices will rise as a result of the war in Ukraine, the National Farmers' Union (NFU) has warned. Factory production jumped in February amid rising domestic demand, fewer raw material shortages and easing global supply chain pressures, according to the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips).

Mr Wallace states the UK government's position in the minor key compared to the fortissimo of the foreign secretary. Factory production jumped in February amid rising domestic demand, fewer raw material shortages and easing global supply chain pressures, according to the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips). This is partly due to the relatively large share of services in UK output and relatively large shares of energy-intensive manufacturing in some other countries (Chart C). The Ukraine conflict prompted a further revisiting of the 2021 ‘integrated review’ into foreign, security, defence and development policy. In addition to capturing these impacts on the UK economy forecast, there is a smaller, though significant, impact on the fiscal forecast from lower UK equity prices, which have fallen in the wake of the Russian invasion. The intensity, regularity and indiscriminate nature of Russia’s attacks may violate international humanitarian law, is extremely concerning and must stop.
For reasons of history and geography, Britain recognized that support is not as “instinctive” for Americans as it for the British, according to a senior diplomat, who spoke on condition of anonymity because of the diplomatic sensitivity of the matter. Duncan Brock, the group director at Cips, said there had been a welcome boost for manufacturers despite prices for raw materials remaining high and disruption continuing for many firms. Russia is the world’s largest exporter of natural gas and among the top suppliers of crude oil, commodities such as wheat, and metals including palladium, platinum, gold and aluminium.


The former Prime Minister Neville Chamberlain has long been criticised for describing Germany's attempted annexation of Czechoslovakia in 1938 as "a quarrel in a far-away country between people of whom we know nothing". Peter Ricketts, the UK’s former national security adviser, joined us to discuss the Ukraine crisis. The question remains as to why the Foreign Office had a comparatively low number of staff focused on the region prior to Russia’s invasion – and the extent to which that hindered the UK’s response.

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