Notes

Ukraine-Russia war latest: Hungary signals 'major shift' in Ukraine funding stance; Russia claims it has taken control of Kharkiv village
Analysts had hoped the cost-of-living squeeze would fade as pandemic restrictions are removed, although now warn the Russian invasion and western sanctions will add to inflationary pressures. Even sectors without direct trade links will be hit by supply chain disruption and rising prices if they depend heavily on Russian and Ukrainian production of inputs. UK manufacturers are facing a sharp rise in costs as the Russian invasion of Ukraine undermines the progress made towards fixing global supply chains before the conflict broke out, economists have warned.

"We could have a very large number of refugees, deaths could reasonably be expected to be high as would destruction within Ukraine," he said. 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. "All sectors grew in January with some industries that were hit particularly hard in December now performing well." But while by far the most significant consequences of the invasion over the past year have clearly been for the people of the Ukraine (and Russia), the advent of war in mainland Europe has also had consequences for UK government. In this box, we considered where the UK gets its energy from and the channels through which higher energy prices raise inflation.
Ms Batters said the shortage of crops would also affect meat production as farmers need it to feed their livestock. "The real danger is that farmers contract, they decide not to invest, they hold back from planting, and we produce less food," she said. The manufacturing trade body Make UK said about 3,800 firms exported goods to Russia while 1,200 brought in materials, despite only accounting for 0.8% of total UK goods exports and 2.1% of imports. “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.

How is the UK indirectly exposed to Russia through energy/commodity markets and global supply chains?
While the official said it was hard to say these were all strategically related, it showed that there was an issue on Eastern Europe's eastern flank. But the official said Russia could also initiate actions against Nato members such as cyber and hybrid warfare, and even physical attacks. "But the extent to which that is possible is impacted by uncertainty because it requires significant long-term investment and that won't be worth doing if this is purely a temporary blip," she says. But despite limited overall trade, some parts of the UK economy are quite reliant on Russia.


The union has written to the government to call for urgent action to help UK farmers produce enough food to keep supermarkets stocked and affordable. In addition, the price of gas - which is used to heat greenhouses and to make fertiliser - has soared. Some 30% of the world's wheat comes from Ukraine and Russia and exports will stop during the conflict, it says.

How exposed is the UK to Russia through financial markets?
This is most likely to affect the two major pipelines that cross Ukraine to bring Russian gas to Europe.[17] An event such as this would imply localised disruption to the flow of Russian gas via Ukraine. In the most disruptive scenario Russia could turn off its supply of natural gas to Europe. If war broke out in Ukraine and Russian forces occupied large swathes of the country, many civilians might flee. 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.


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. Charles Michel, the president of the EU Council, added that Nato was “clearly embarrassed” by its inability to intervene in the conflict to help Ukraine. In the documentary, Ms Truss also admitted that the UK had not taken strong enough economic measures prior to the invasion to deter Putin.


If gas and electricity prices stay at the current levels, the Resolution Foundation predicts that the energy price cap next winter will be almost £1,000 higher than the elevated level set to be introduced in April (£1,971). "We are all going to suffer, but it will hit poorer people more than the average person as they spend proportionately more on heating and food." 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". Computer programming and film and TV production also had a good start to the year, said Darren Morgan, ONS director of economic statistics.


Germany has said it might need to use coal, the most polluting fossil fuel, for longer than expected, in order to free itself from gas. The conflict could push up British energy bills to £3,000 in October 2022, potentially a £600 increase from previously expected levels, according to ECIU. The UK gets just 5-6% of its gas imports from Russia, according to analysis of government data by think tank ECIU, so supplies are not likely to be so directly affected. Since Russia invaded Ukraine, British Petroleum (BP) ditched its 19.75% shareholding in Russian oil giant Rosneft. Several other fossil fuel companies including TotalEnergies, Shell, Equinor, ExxonMobil are also ceasing ventures with Russian majors. With a grave humanitarian crisis unfolding in Ukraine, some fear the war will distract from climate action.


These actions are likely to be felt by individual firms and investors, and potentially some sectors, but their wider impact will not be large relative to, for example, those relating to energy supply. While much commentary is focused on Russia’s energy there are several other commodities whose supply could be substantially affected by the Russia–Ukraine war, from wheat to palladium. Instead it has strengthened political consensus that domestic renewables offer the cheapest and most secure form of energy. The government is likely to face further pressure on its tentative support for onshore wind and solar. Energy efficiency – long a neglected policy area – is also back in vogue, particularly in the Treasury. There is a new target and a new taskforce, though not yet a credible plan for insulating homes.

“Uncertainty is deterring business investment and threatening to curb supply for years to come. 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. 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. 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. 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 the US abandons the military alliance, it will fall to European countries to ensure a Ukrainian victory, Mr OBrien says. A prominent war expert says the US is on the verge of lessening its support for, or even withdrawing from, NATO - with potentially catastrophic consequences for Europe. The official added that budget talks are "ongoing" and have "always been based on finding a compromise" acceptable to all member states. "This is a factual paper which does not reflect the status of the ongoing negotiations. The note does not outline any specific plan relating to the [long-term EU budget] and Ukraine Facility, nor does it outline any plan relating to Hungary," it said. Moscow says it cannot accept that Ukraine - a former Soviet republic with deep social and cultural ties with Russia - could one day join the Western defence alliance Nato and has demanded that this be ruled out. When asked about these comments, Mr Wallace said Mr Lavrov was "a master at these types of engagements and making those type of comments", but that there had been no deafness or blindness in his talks with Mr Shoigu.

The same failure to ‘see the face behind the case’, to take a compassionate approach to service delivery and to balance competing priorities contributed to the Home Office’s failings in the Windrush scandal and lay behind its subsequent transformation programme. The country is a major producer of metals such as titanium, nickel, cobalt and lithium. Even sectors without direct trade links will be hit by supply chain disruption and rising prices if they depend heavily on Russian and Ukrainian production of inputs. 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.
Mr Lavrov said he was disappointed with the talks, accusing Ms Truss of not listening to Russia's concerns and describing their conversation as "a dialogue between a deaf person and someone who was mute". But when asked about the state of UK-Russia relations, Mr Wallace said they were "a lot better than 0%" after Friday's talks. Mr Shogiu said the counter-proposals submitted by Nato and the US had now been reviewed and promised "our response will follow shortly". Western countries have rejected this and instead put forward other suggestions, such as cutting back nuclear weaponry. Security concerns have grown in recent days after Russia started huge military drills with neighbouring Belarus and was accused of blocking Ukraine's access to the sea. Russia wants assurances that Ukraine will never be allowed to join Nato; that Nato members will have no permanent forces or infrastructure based in Ukraine; and for a halt to military exercises near Russia's border.

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. 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. https://rentry.co/w7dm3i82 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. As expected, Vladimir Putin has been officially registered as a candidate for the Russian presidential election this March. However, Mr Orban's political director said this morning that Hungary was open to using the EU budget to allow further aid for Ukraine.

US officials have also pointed to an increase in Russia's social media "disinformation". The intelligence official described the build-up as a "slow drip" and a "slow ratcheting up of pressure". Gemma Tetlow, chief economist at IfG, says that there are potential opportunities for UK producers in markets like barley, wheat and gas. IfG's Mr Bartrum says that this uncertainty is likely to slow recovery from the pandemic. The EU imports more than a third of its nickel from Russia, 28% of fertilisers and 27% of its mineral fuels.

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