Notes

How a Russian invasion of Ukraine could spill over into Europe
Boris Johnson, the former prime minister, revealed how he feared in Spring 2022 that Kyiv would come under pressure to accept a bad peace deal. But in a new BBC documentary to be aired on Monday, Ms Truss, the then foreign secretary, reveals that his efforts went down badly in Downing Street. "There is no prospect of food shortages at any point in the future, and Defra are working with Treasury to try and make sure that that continues to be the case," he said.


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.

Russia–Ukraine war: how could it affect the UK economy?
Laurence Boone, the thinktank’s chief economist, said the UK was being hit by a combination of factors, including higher interest rates, higher taxes, reduced trade and more expensive energy. Balazs Orban, chief political aide to the prime minister, said Hungary sent a proposal to the EU over the weekend showing it was open to using the budget for the aid package if other "caveats" were added. Earlier today, a Russian official said air defences had thwarted a drone attack on the Slavneft-YANOS oil refinery in the city of Yaroslavl. "A frank and constructive dialogue is expected to improve relations between states," the Ukrainian president's office said on its official channel on the Telegram messaging app alongside a photo of Mr Szijjarto, Mr Kuleba and Mr Yermak.


The Western defence official said that if Russia chose to carry out an attack now it could do so. But he said Russian forces massed on the border were still missing some crucial elements - such as full logistical support, ammunition stocks, field hospitals and blood banks. A senior Western intelligence official has warned that if Russia decides to invade Ukraine, a conflict could spill over further into Europe.

Useful links
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. https://etextpad.com/ 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.

UK households were already facing sharply rising costs before Russia's invasion of Ukraine, in part due to soaring energy costs. 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. 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. 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. In a sign the worst of the disruption caused by the pandemic could have peaked, companies said the number of delivery delays fell last month to the lowest since November 2020. “Uncertainty is deterring business investment and threatening to curb supply for years to come.
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.


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. "Given the current crisis in Ukraine the demand for food is ever increasing," he told the BBC. Dan Wallis, who runs Rookery Farms in Newbury, Berkshire, said he decided this week to sow spring wheat on land that was not due to be planted on until next autumn.

In this box, we considered where the UK gets its energy from and the channels through which higher energy prices raise inflation. "We could have a very large number of refugees, deaths could reasonably be expected to be high as would destruction within Ukraine," he said. "All sectors grew in January with some industries that were hit particularly hard in December now performing well." 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.
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.

It killed at least 41 civilians, including a 15-year-old boy, wounded hundreds, and caused significant damage to civilian infrastructure, including a maternity hospital. 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. 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.
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.


Homepage: https://etextpad.com/