Notes

How does the Russian invasion of Ukraine affect the UK economy? Office for Budget Responsibility
Only aircraft deployed to protect energy facilities, or those carrying top Russian or foreign officials, will be allowed to fly with special permission in the designated zones, according to the Vedomosti daily newspaper. "The document referred to in the Financial Times article is a background note written by the secretariat of the council under its own responsibility which describes the current status of the Hungarian economy," the statement by the senior EU official said. Earlier this week, French President Emmanuel Macron said he thought a deal to avoid full-scale war in Ukraine was possible. Mr Wallace states the UK government's position in the minor key compared to the fortissimo of the foreign secretary. Russia has made a series of security proposals, including a demand to rule out Ukraine's membership of the Nato defence alliance. At a news conference on Friday, Mr Wallace said that Russian forces were in a position to invade "at any time", but he had been given security assurances by Mr Shogiu.


Almost 20% of the UK's vegetable product imports come from there, according to UN Comtrade data. At first glance, it appears that the UK will easily be able to weather the economic fallout from the war as neither Russia nor Ukraine are big trading partners. There is also expected to be a considerable jump in the prices we pay at the supermarket and petrol pump. Despite this, Mr Dales still expects the Bank of England to increase interest rates at its meeting on Thursday next week, with the main Bank rate likely to rise from 0.5% to 0.75%. "GDP bounced back from the hit it took in December due to the Omicron wave and is now 0.8% above its pre-pandemic peak," he said. UK households were already facing sharply rising costs before Russia's invasion of Ukraine, in part due to soaring energy costs.

UK to be major economy worst hit by Ukraine war, says OECD
The NFU is asking the government to release an additional 10,000 visas under the Seasonal Workers Scheme, in addition to the 30,000 already granted. The cost of producing a chicken was 50% higher than it was a year ago but farmers were absorbing much of these costs, she said. NFU president Minette Batters told the BBC that the rising cost of producing fruit, vegetables and meat could cause farmers to make less at a time when the nation needs more.


The economic consequences of the Ukraine invasion are pushing both inflation and growth in the wrong direction. Russia's invasion of Ukraine means significant uncertainty for the UK economy, the chancellor has warned. We won't know for some time how badly Ukraine's landscape, nature and climate action will be impacted by the war. Many experts say it is too soon to tell how Russia's invasion will affect its participation in climate diplomacy and international action, such as at the next yearly United Nations climate talks, COP27, in Egypt in November. A small group of around 18 Conservative MPs want the UK to increase its own fossil fuel supply by boosting North Sea fossil fuel production and lift the fracking moratorium.

Ukraine invasion: What does it mean for UK energy supply and global climate change action?
Many analysts say Beijing in particular is looking on as it formulates its own plans to reunify Taiwan with mainland China. The fear is that if Russia is allowed to invade Ukraine unresisted, that might act as a signal to other leaders that the days of Western powers intervening in other conflicts are over. Western powers are acutely aware this crisis is being closely watched by the rest of the world.


The government's independent advisory Climate Change Committee recently warned that any new North Sea projects will take an average of 28 years to start producing oil and gas. The ‘global’ in Britain was reflected in an ambition to more deeply engage in the Indo-Pacific, to adapt to China’s growing power and climate and global health objectives. Another risk is that Sunak’s can-kicking over budgets postpones the serious investment needed in military supplies. Western materiel and equipment are being depleted at a rapid rate on the battlefields of Ukraine, leading to concerns that neither government nor industry have moved to the war-footing required for resupply. Serious discussion of defence spending, procurement and supply will be a new reality for the government for years to come. The Russian invasion displaced Ukrainians who, fleeing the conflict, became refugees in need of accommodation and support.


However, any disruption to the supply of energy to Europe will affect wholesale prices in the UK to a greater extent than implied by direct trade links. UK and European gas prices have moved in tandem in 2022.[9],[10] This is because traders buy gas in the UK to avoid higher prices in Europe then export it to the continent, both reducing UK supply and causing prices to rise in Europe, until the prices equalise. Disruption to Russian gas exports to other European countries would also push up prices in other markets the UK uses, such as Norway, as demand would rise across Europe. However, experts said the conflict in Ukraine – which has triggered a surge in oil and gas prices, as well as renewed supply chain disruption – would hit firms across Europe and drag down industrial production over the coming months. The economic impact of the war will depend on the extent to which the conflict, and therefore the severity of sanctions and economic disruption, escalates and how long it lasts. Below is an outline of how disruption to the trade of energy and commodities could affect the UK and other European economies under three broad scenarios.

There is also expected to be a considerable jump in the prices we pay at the supermarket and petrol pump. In line with the spirit of that pre-Russian invasion period, the original document was titled “Global Britain in a competitive age”. I offer my condolences and that of the UK to all Ukrainians for the lives lost due to these barbaric airstrikes.
In a joint news conference with Nato secretary general Jens Stoltenberg, Mr Johnson said Europe faced its biggest security crisis in decades. Ben Wallace's trip to Moscow does not signal any significant shift in the balance of this crisis. But his meeting with Russian defence chiefs does seem to have been a calmer affair than Thursday's frosty exchanges between the foreign ministers, Liz Truss and Sergei Lavrov. The current tensions come eight years after Russia annexed Ukraine's southern Crimea peninsula.

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. UK and European gas prices have moved in tandem in 2022.[9],[10] This is because traders buy gas in the UK to avoid higher prices in Europe then export it to the continent, both reducing UK supply and causing prices to rise in Europe, until the prices equalise. Russia wants Nato to make a legally binding promise that Ukraine will never become a member. 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 Bank of England raised interest rates again in March to try and moderate rising prices. The CEBR predicts that inflation will now peak at 8.7% next quarter and then stay twice as high as expected until the second half of 2023. This means a shopping basket that cost £20 a year ago will cost almost £22 in the next few months. He called for the government to halt a planned National Insurance increase in April. "All sectors grew in January with some industries that were hit particularly hard in December now performing well." All in all, the economy was on course to maintain its return to normal after the pandemic.

The UK imported around 13% of its total fuel (oil, gas, LNG, electricity) from Russia in 2019. As prime minister Boris Johnson promised to increase defence spending from an existing 2% to 2.5% of GDP; his successor Liz Truss went further by committing to 3%. Trade between the two is small relative to the size of either economy and Russia is not closely integrated in the global financial system. But when asked about the state of UK-Russia relations, Mr Wallace said they were "a lot better than 0%" after Friday's talks. Another risk is that Sunak’s can-kicking over budgets postpones the serious investment needed in military supplies. Nato powers are already promising to build up their own forces in the alliance's eastern flank.
In talks with Sergei Shogiu, Mr Wallace said he urged dialogue to resolve the crisis in eastern Ukraine. A Russian invasion of Ukraine would have "tragic consequences" for both countries, UK Defence Secretary Ben Wallace has warned his counterpart in Moscow. President Biden's virtual meeting with President Putin earlier this week was a start and will be followed up by more talks with other Nato members.

While supply chain issues continued to dog some sectors, construction and manufacturing both grew, the ONS said. While a line may now thankfully be drawn under the pandemic's economic hit, the inflationary cloud is now looking very dark indeed. Grain prices have also jumped as both Russia and Ukraine are major global producers, particularly of wheat. The UK and our allies condemn the Russian government’s unprovoked and premeditated invasion of Ukraine. The UK stands with Ukraine, its democratically-elected government and its brave people at this awful time.

Gas prices have also soared, leading to warnings that average energy bills could reach £3,000 per year in October, after rising to £2,000 in April when the energy price cap is raised. 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. The government's independent advisory Climate Change Committee recently warned that any new North Sea projects will take an average of 28 years to start producing oil and gas. Mr Sunak 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".
“A humanitarian crisis is unfolding before our eyes, leaving thousands dead, forcing millions of refugees to flee their homes and threatening an economic recovery that was under way after two years of the pandemic,” she said. But the senior Western intelligence official warned that "military options are highly likely on the table in the Kremlin" if Russia's demands are not satisfied. In response to the invasion, the geopolitical risk index developed by the US Federal Reserve spiked to the highest level since the start of the Iraq war in 2003. But he adds that this disruption is "nothing" compared to the ripple effect from rising energy prices. Mr McFadden also said the government "must look again at Labour's proposal for a one-off windfall tax on oil and gas producers to cut household energy bills by up to £600". The UK government is providing a range of economic, humanitarian and defensive military assistance to Ukraine, and is imposing additional sanctions on Russia and Belarus.

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