Notes

Monetary and financial stability and the invasion of Ukraine speech by Jon Cunliffe
But European governments could go further and force non-critical industries to shut down or mandate a reduction in use of gas in commercial/office buildings and homes. In a scenario where there is relatively little disruption to energy supplies, the main impact on the UK and other European economies is comes from uncertainty on gas prices. So far gas has continued to flow from Russia to Europe (including via Ukraine) during the conflict, though wholesale prices have increased significantly. The UK imported around 13% of its total fuel (oil, gas, LNG, electricity) from Russia in 2019.


The predictions – contained in the OECD’s half-yearly economic outlook – represent a sharp downgrade from the estimated 4.7% growth this year and 2.1% next year made six months ago. 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. 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. Mr Zelenskyy has called for public officials to disclose their incomes to increase transparency and eliminate corruption as Ukraine tries to meet the stringent requirements for its bid to join the European Union. His incomings fell in 2022 as he earned less rental income from real estate he owned because of the outbreak of the war. 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.

Russian invasion of Ukraine: UK government response
Hungary previously said it would block further financial aid to Ukraine, but this morning suggested it was ready to compromise after the EU reportedly drew up plans to hit Budapest's economy. Hungary has signalled it is ready to compromise on EU funding for Ukraine - after Brussels reportedly prepared to sabotage its economy if it did not comply. Meanwhile, Moscow has claimed its forces have taken control of the village of Tabaivka in Ukraine's northeastern Kharkiv region. "I was clear about the tragic consequences that any invasion of Ukraine could have for all people - both Ukrainian, Russian and the security of Europe," Mr Wallace said of his meeting with the Russian defence minister. If Russia did decide to invade Ukraine, the senior Western intelligence official said large numbers of people would be displaced.


All of this disruption could massively increase the price of gas in Europe and, consequently, the UK. But we now see more clearly that, in a crisis, for the foreseeable future UK interests are aligned with the US and Europe, especially if China aligns itself more with Russia. The revival of NATO’s purpose and a unified western response have been a necessary if painful reminder of where UK interests truly lie. One risk is that leaks and arguments about the size of the army, military procurement and GDP percentages distract from a serious reckoning on what a new war in Europe means for the post-Cold War ‘peace dividend’ that has benefited us all.

Opposition to Russia's demands
"We live in an unstable world. If rich counties fail to support vulnerable countries in tackling climate impacts and in their clean energy transition, it will only fuel a spiral of instability." However, as indicated above, if financial sanctions are extended such that they disrupt energy trade, this could lead to more profound economic impacts for the UK and other European countries. Including Gazprombank and Sberbank, another majority state-owned bank, in the SWIFT ban could further disrupt the energy trade. Many of the sanctions imposed on Russia’s financial system so far exclude transactions related to energy and agriculture. 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.

Some 30% of the world's wheat comes from Ukraine and Russia and exports will stop during the conflict, it says. Many analysts say Beijing in particular is looking on as it formulates its own plans to reunify Taiwan with mainland China. 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. Since Russia invaded Ukraine, British Petroleum (BP) ditched its 19.75% shareholding in Russian oil giant Rosneft. Olly Bartrum, a senior economist at the Institute for Government (IfG), says that disruption to global metal markets will affect many key UK sectors like automotive, smartphones and aerospace.
After 2,000 anti-tank weapons were delivered last week and 30 British troops arrived to teach Ukrainian forces how to use them, the phrase "God Save the Queen" began trending on Twitter in Ukraine. Some bars and restaurants in Kyiv were offering free drinks to anyone who had a UK passport. But his remark lives on as a challenge to all policymakers thinking about whether to engage diplomatically - and even militarily - in a potential conflict between two foreign countries. It's promising to deploy British forces to eastern European members of the Nato military alliance if Russian troops cross Ukraine's borders. After its botched start, Homes for Ukraine has been an effective model for accommodating large numbers of refugees (more than 110,000 as of January 2023) while defusing the political tension that characterises other asylum policy.


Russia’s invasion of Ukraine has profoundly changed the calculus in deciding where to invest and where to cut. That means extremely difficult choices for a Treasury gearing up for retrenchment and conscious that protecting military budgets means cuts would fall even more heavily on public services, themselves in desperate need of more investment. 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%. https://matzen-larsen.thoughtlanes.net/uk-will-not-look-away-from-russia-invasion-in-ukraine-pm-1707255575 in approach to resourcing Russia and Ukraine is noticeable, and the UK can consider its response to the war so far a diplomatic success.

He discusses what implications this could have on monetary policy, and gives an assessment on the resilience of the financial system. But beyond the Johnsonian rhetoric the 2021 document was quite clear-sighted about UK interests. "Given the current crisis in Ukraine the demand for food is ever increasing," he told the BBC. But the official said Russia could also initiate actions against Nato members such as cyber and hybrid warfare, and even physical attacks. 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.
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