Notes

Ukraine-Russia war latest: Hungary signals 'major shift' in Ukraine funding stance; Russia claims it has taken control of Kharkiv village
Despite warnings from the US and its Nato allies that any invasion by Russia of Ukraine would have "severe economic consequences," Moscow's military build-up on the border continues. The latest data for January 2022 shows that the UK economy is now stronger than it was before the pandemic. Sanctions on Russia are already starting to worsen an acute cost of living crisis in the UK. Average household income is expected to fall a further £1,259 with larger price rises than expected until the end of 2025, according to new estimates. Labour's shadow chief secretary to the Treasury, Pat McFadden, said households were facing "a year of surging inflation, weak earnings growth and tax rises".


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.

Opposition to Russia's demands
All three lead to higher consumer prices, which will mean a reduction in households’ ‘real’ incomes (that is, adjusted for inflation) and therefore consumption, limiting their economic output (GDP). Ukraine is the world’s second biggest exporter of grains and Russia often tops the ranking for wheat exports. Any disruption to flows would quickly ripple through to buyers globally, raising costs for bread and meat. And while commodity prices tend to be only a small proportion of the price of final food products, UK consumers would be likely to see higher prices on supermarket shelves – this could manifest later this year at a time of already high inflation. Soaring energy costs and supply chain disruption caused by Covid have driven inflation to the highest levels in three decades.

This shift in approach to resourcing Russia and Ukraine is noticeable, and the UK can consider its response to the war so far a diplomatic success. US President Joe Biden has also called on all American citizens remaining in Ukraine to leave the country immediately, citing increased threats of Russian military action. Some bars and restaurants in Kyiv were offering free drinks to anyone who had a UK passport. The Russian invasion displaced Ukrainians who, fleeing the conflict, became refugees in need of accommodation and support. 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.
“Uncertainty is deterring business investment and threatening to curb supply for years to come. At the same time, China’s zero-Covid policy continues to weigh on the global outlook, lowering domestic growth and disrupting global supply chains,” she added. 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.

Russia's wanton destruction against Ukraine must be stopped: UK statement to the OSCE
Ukraine is known as the "breadbasket of Europe," responsible for a large proportion of the world's wheat. 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. Leaders including Prime Minister Boris Johnson and Ursula von der Leyen have both called for an accelerated roll-out of clean energy. The German government has brought forward its target for 100% renewable electricity by five years to 2035.

The French president carried on holding phone calls with Putin long after other Nato countries had cut ties with the Kremlin over its illegal war. 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. Several other fossil fuel companies including TotalEnergies, Shell, Equinor, ExxonMobil are also ceasing ventures with Russian majors. If sanctions were to go further, for example by including Gazprombank (a key bank for Russian energy conglomerates) in the SWIFT ban, European countries may have difficulty paying Russian firms for gas, which could result in a reduction in supply.
“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.

We will continue to work with Ukraine and our international partners for a just and sustainable peace. According to reports, Russian missiles on Kyiv and Kharkiv killed at least 18 people and injured over one hundred. The devastation was felt most acutely in Kharkiv, where an apartment block was hit, killing two people, and injuring 35 residents.


If, contrary to what is reflected in futures prices, energy prices stay at current levels beyond the middle of next year, the UK would face a larger and more persistent increase in the price level and fall in real household incomes. Permanently higher energy prices could deliver an adverse supply shock that reduced potential output in the medium term, which in turn would damage the structural fiscal position. In https://ambitious-camel-g3r4ks.mystrikingly.com/blog/discovering-the-age-of-carol-silva-from-news-12 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. Our fiscal forecast captures the direct effect of lower equity prices on capital gains tax on the disposal of financial assets, though we do not assume any indirect wealth effect from lower equity prices on consumption and GDP.


He said the security situation in Europe was without precedent since the fall of the Iron Curtain. "Added to that are the recent border crisis involving thousands of migrants in Belarus, as well as Russia's backing of separatists in the Caucasus and elsewhere," he said. But the official noted there had been a combination of sharp bellicose rhetoric from Moscow, accusations of being provoked by Ukraine and Nato, a lack of transparency, and a worrying track record, including the annexation of Crimea in 2014. The war that erupted in eastern Ukraine in 2014 has already left 14,000 dead and an estimated 1.4 million displaced. "We could have a very large number of refugees, deaths could reasonably be expected to be high as would destruction within Ukraine," he said. Meanwhile, other Western defence sources have expressed concern about an increase in signals intelligence and "chatter" being monitored which could signal Russia's preparedness to invade.


"I think the whole world has got to recognise that this is not something we've faced before, we are going to see wheat price inflation levels that have never happened," she said. Last week, Boris Johnson, another former prime minister, argued that the re-election of Donald J. Trump to the White House would not be such a bad thing, so long as Mr. Trump comes around on helping Ukraine. “I simply cannot believe that Trump will ditch the Ukrainians,” Mr. Johnson wrote in a Daily Mail column that read like a personal appeal to the candidate. Britain’s economy is forecast to slow to a standstill next year as it suffers more than any other major industrial country from the effects of Russia’s invasion of Ukraine. The Russian president has intensified a crackdown on opposition since the start of his invasion of Ukraine, and this has ramped up further as the elections have approached. Prime Minister Viktor Orban has been highly critical of the EU's financial and military aid for Ukraine and has maintained close ties with Russia.


The bounce back in the economy in January was not just stronger than expected, it was also seen in buoyant tax revenues. The economy grew by 0.8% compared with a 0.2% contraction in December the Office for National Statistics said. The UK and our allies condemn the Russian government’s unprovoked and premeditated war against Ukraine. Egypt, China and Turkey import significant portions of these grains and are therefore particularly at risk.

Meanwhile, Indian thinktank Observer Research Foundation's Russia expert, Nandan Unnikrishnan, said India was unlikely to sign "any major military deal" with Russia because it would cross a red line with the US. Opposition leader Alexei Navalny, who has been serving prison time since 2021 after leading street protests and starting a nationwide opposition movement, was recently moved to a penal colony in Russia's far north. The Western defence official said that if Russia chose to carry out an attack now it could do so. To that end the review already committed to exceeding NATO spending commitments, and the UK playing its part in multilateral governance and collective security in a more hard-nosed way.
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.

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