Notes

How a Russian invasion of Ukraine could spill over into Europe
The union has written to the government to call for urgent action to help UK farmers produce enough food to keep supermarkets stocked and affordable. In addition, the price of gas - which is used to heat greenhouses and to make fertiliser - has soared. Some 30% of the world's wheat comes from Ukraine and Russia and exports will stop during the conflict, it says.


This is most likely to affect the two major pipelines that cross Ukraine to bring Russian gas to Europe.[17] An event such as this would imply localised disruption to the flow of Russian gas via Ukraine. In the most disruptive scenario Russia could turn off its supply of natural gas to Europe. If war broke out in Ukraine and Russian forces occupied large swathes of the country, many civilians might flee. But both of these demands would break key Nato principles, namely that the alliance should be open to any European country that wants to join and that all Nato members should be sovereign nations.

Non-bank risks, financial stability and the role of private credit – speech by Lee Foulger
The impact of the Russian invasion of Ukraine on our forecast for the UK economy comes primarily via the impact of higher energy prices on inflation, real incomes, consumption and imports. Higher oil prices feed into the fuel component of CPI prices directly, while the household utility component is adjusted for expected changes in wholesale gas and electricity prices every six months via the Ofgem price gap. We assume that wages do not rise to compensate for this bout of higher inflation which is driven by external forces. We already expected firms’ profit margins to be squeezed by other cost increases that were expected before the invasion. The UK does not have significant direct trade links with either Russia or Ukraine, so our economy’s most direct exposure to Russia’s invasion of Ukraine is via its impact on the global price of energy. The UK’s total energy demand fell by 22 per cent between 2000 and 2019, reflecting both a shift away from more energy-intensive industries and improvements in economy-wide energy efficiency.


So, as a net energy importer with a high dependence on gas and oil, higher global energy prices will still weigh heavily on the UK economy. But Russia is a major producer in global energy markets, accounting for 17 per cent of gas and 12 per cent of oil production globally in 2019 (Chart B, bottom-right panel). And both the UK’s domestic and foreign supplies of oil and gas are purchased at market prices which, as described elsewhere in this chapter, have risen sharply following the Russian invasion and international response. This would be amplified by falling UK consumer confidence,[25] which had weakened even before the invasion because of the cost of living crisis and impact of the Omicron variant.

Ukraine crisis: transparency of Russian money flows in the UK
Analysts had hoped the cost-of-living squeeze would fade as pandemic restrictions are removed, although now warn the Russian invasion and western sanctions will add to inflationary pressures. Even sectors without direct trade links will be hit by supply chain disruption and rising prices if they depend heavily on Russian and Ukrainian production of inputs. UK manufacturers are facing a sharp rise in costs as the Russian invasion of Ukraine undermines the progress made towards fixing global supply chains before the conflict broke out, economists have warned.


European countries have largely outsourced much of their military capacity and thinking on strategy and security to the States through NATO. Phillips P OBrien, professor of strategic studies at the University of St Andrews, wrote in an analysis piece that the potential return of Donald Trump to the White House could see the US "neuter" the Western military alliance. A senior European Union official has denied member states are discussing financial coercion to force Hungary to agree on financing for Ukraine. There is some suggestion that a renewed focus on the so-called Minsk agreements - which sought to end the conflict in eastern Ukraine - could be used as a basis to defuse the current crisis. Russia has been backing a bloody armed rebellion in Ukraine's eastern Donbas region since 2014.

Russia's wanton destruction against Ukraine must be stopped: UK statement to the OSCE
Mr Lavrov said he was disappointed with the talks, accusing Ms Truss of not listening to Russia's concerns and describing their conversation as "a dialogue between a deaf person and someone who was mute". But when asked about the state of UK-Russia relations, Mr Wallace said they were "a lot better than 0%" after Friday's talks. Mr Shogiu said the counter-proposals submitted by Nato and the US had now been reviewed and promised "our response will follow shortly". Western countries have rejected this and instead put forward other suggestions, such as cutting back nuclear weaponry. Security concerns have grown in recent days after Russia started huge military drills with neighbouring Belarus and was accused of blocking Ukraine's access to the sea. Russia wants assurances that Ukraine will never be allowed to join Nato; that Nato members will have no permanent forces or infrastructure based in Ukraine; and for a halt to military exercises near Russia's border.

Whatever the medium- or long-term effects of the war it is likely that firms and households around the world, but also in the UK – fearful of the worst-case scenario – will delay investment and consumption decisions, holding back the wider pandemic recovery. Ben Wallace's trip to Moscow does not signal any significant shift in the balance of this crisis. As well as driving up costs for energy intensive companies, western sanctions on Russia could hit the availability of materials used in the aerospace, automotive and electronics industries. Grain prices have also jumped as both Russia and Ukraine are major global producers, particularly of wheat. Unnamed Indian government sources have suggested India wants to distance itself from Russia, according to Reuters news agency.
If gas and electricity prices stay at the current levels, the Resolution Foundation predicts that the energy price cap next winter will be almost £1,000 higher than the elevated level set to be introduced in April (£1,971). "We are all going to suffer, but it will hit poorer people more than the average person as they spend proportionately more on heating and food." https://bagge-albrechtsen.mdwrite.net/where-to-find-fox-news-on-comcast said that Russia's invasion "is creating significant economic uncertainty", but "it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails". Computer programming and film and TV production also had a good start to the year, said Darren Morgan, ONS director of economic statistics.


So, price increases and potential shortages in these non-energy commodities represent additional upside risks to our inflation forecast and downside risks to our real GDP forecast. Russia’s invasion of Ukraine in the run-up to our March 2022 Economic and fiscal outlook represented a significant adverse shock, primarily via a sharp rise in gas and oil prices. In this box, we considered where the UK gets its energy from and the channels through which higher energy prices raise inflation.

Since then, Ukraine's military has been locked in a war with Russian-backed rebels in eastern areas near Russia's borders. He says Europe is rich enough to do so if it has the political will, pointing to a recent report from the Estonian Ministry of Defence suggesting that committing 0.25% of GDP annually towards Ukraine would provide "more than sufficient resources". It's highly likely the election will see him start a new six-year term, which - if completed - would make him Russia's longest-serving ruler since the 18th century. For decades the European Union has heavily relied on Russia's oil and gas, generating money and cash for Russia.
Unfortunately, the attacks on Tuesday morning were just the latest of a series of acts of wanton destruction by Russia in Ukraine since we last gathered for a Permanent Council in December. Over the Christmas period, Russia launched hundreds of missile and drone strikes across cities in Ukraine including Kyiv, Odesa, Kharkiv, Dnipro and Lviv. This culminated on 29 December, when Russian unleashed its largest aerial assault against Ukraine since the war began.


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