Notes

How does the Russian invasion of Ukraine affect the UK economy? Office for Budget Responsibility
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 decades the European Union 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.


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.

Lazy Britain now needs to be paid to get back to the office
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.


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.

Elsewhere on the BBC
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.

“The recent shortages of components, such as microchips, could continue and expand into other areas as sanctions and export restrictions limit supply that feed into the wider supply chain,” Thornton added. However, 76 per cent of the UK’s gross consumption comes from gas and oil compared with a European average of 57 per cent. The OECD said the UK was expected to go from the second-fastest-growing economy in the G7 group of industrial nations after Canada this year to the slowest-growing in 2023. Computer programming and film and TV production also had a good start to the year, said Darren Morgan, ONS director of economic statistics.
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.

UK to be major economy worst hit by Ukraine war, says OECD
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.

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. 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. Those standing against Mr Putin in the upcoming election, including anti-war candidate Boris Nadezhdin, have until Wednesday to gather the required number of supporters' signatures to back their campaigns. 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. 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. UK food prices will rise as a result of the war in Ukraine, the National Farmers' Union (NFU) has warned.
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.


"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. https://notes.io/wi789 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.


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