Notes

Ukraine invasion: What does it mean for UK energy supply and global climate change action? Climate News
We remain deeply humbled by the bravery and the resilience of the Ukrainian people and their determination to win. The Federation of Wholesale Distributors has also warned that the increase in fuel prices will lead to people paying more for food in shops and restaurants. Its letter warned that disruption to food production, supply chains and the availability and affordability of food in the shops could last for years. The conflict in Ukraine pushed the price of oil to its highest level for nearly 14 years at one point and this has had a knock-on impact on fuel costs, with UK petrol prices hitting record highs. But because the UK operates in international gas markets, prices will be hit by any drop in global supply. Earlier this week, the boss of one of the world's biggest fertiliser companies, Yara International, warned that the war in Ukraine would deliver a shock to the global supply and cost of food.


The UK, US and EU also announced sanctions against the Russian Central Bank, which involve freezing its assets held in sterling, dollars and euros. By restricting Russia’s access to much of its $600–700bn in foreign exchange reserves, this move significantly limits the central bank’s ability to stabilise the rouble as it had done in response to the initial sanctions. situation in Ukraine could choose to impose partial or targeted sanctions on energy trade, rather than a full cut off of supply.

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Mr Johnson said the invasion of Ukraine should “mark the end” of the West’s soft approach towards Putin who he said needed to be “put back in the box”. The former prime minister said that the military alliance’s dithering over whether Kyiv would be allowed to join had been a “fatal” error. “We realised the weapons and the sanctions were the real levers that we had over Russia but we were behind the curve in terms of our sanctions,” she said. Another factor affecting food production in the UK is that Ukrainian workers have accounted for 60% of recruits under the UK's Seasonal Workers Scheme, the NFU said.


In response to the current crisis, the EU is proposing expedite plans to link Ukrainian's electricity system to the EU's, which would boost Ukraine's independence from Russia's grid, with which it is currently tied. Policy responses to Ukraine should address all the interlocking crises, says Bernice Lee from Chatham House. The Expert Factor team pick out the key moments ahead in 2024 – and explore what the future might mean for British politics and government.

Monetary and financial stability and the invasion of Ukraine − speech by Jon Cunliffe
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. 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. Madame Chair, as we approach the third year since Russia’s full-scale invasion, the UK’s support will not falter. During his visit to Kyiv earlier this month, my Prime Minister announced a package of support and reaffirmed the close UK-Ukraine partnership. This included £2.5 billion in military support and a historic long-term security agreement. This brings the United Kingdom’s total package of support to Ukraine to approximately £12 billion.

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. 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. European countries have largely outsourced much of their military capacity and thinking on strategy and security to the States through NATO. The country is a major producer of metals such as titanium, nickel, cobalt and lithium. 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. 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.
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. Despite limited dependence on Russian imports, surging global prices are expected to erode living standards even further. Paul Dales, chief UK economist at Capital Economics, said that while the economy had "rebounded with vigour" in January, "the cost of living crisis and the influence of the war in Ukraine probably means this is as good as it gets for the year". He added that the government had "provided unprecedented support" throughout the Covid pandemic, "which has put our economy in a strong position to deal with current cost of living challenges". Gas prices have also soared, leading to warnings that average energy bills could reach £3,000 per year in October, after rising to £2,000 in April when the energy price cap is raised.


Despite the share of renewable energy increasing 11-fold over this period, the share of gas and oil in energy consumption has remained reasonably stable at 73 per cent owing to declining coal and nuclear power (Chart B, top-right panel). We have not taken explicit account of the impact on inflation, or on the wider economy, of price rises of other commodities of which Russia and Ukraine are also major global producers such as wheat, nickel, and palladium. Some global wheat prices have risen by more than 40 per cent this year and food and non-alcoholic beverages comprise 11.5 per cent of the CPI basket.

"We could have a very large number of refugees, deaths could reasonably be expected to be high as would destruction within Ukraine," he said. In this box, we considered where the UK gets its energy from and the channels through which higher energy prices raise inflation. "All sectors grew in January with some industries that were hit particularly hard in December now performing well."
Since then, Ukraine's military has been locked in a war with Russian-backed rebels in eastern areas near Russia's borders. The talks between Mr Wallace and Mr Shogiu were the latest in a period of frenzied diplomacy intended to defuse the current crisis in eastern Ukraine. 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.


Whatever the medium- or long-term effects of the war it is likely that firms and households around the world, but also in the UK – fearful of the worst-case scenario – will delay investment and consumption decisions, holding back the wider pandemic recovery. BP Plc, Russia’s largest foreign investor, led the way on 27 February by announcing that it would exit its 20% stake in Rosneft, a state-controlled company. This could result in a $25bn write-off and a large reduction in its global fuel production.


A little earlier, we told you about a report in the Financial Times that the EU was proposing to sabotage Hungary's economy if Budapest blocks further aid for Ukraine this week. A spate of Ukraine-linked attacks on Russia's oil infrastructure have reportedly led Moscow's energy ministry to propose restricting flights over energy facilities. Moscow has claimed its forces have taken control of the village of Tabaivka in Ukraine's northeastern Kharkiv region. This could see states like Poland and the Baltics decide to aid Ukraine on their own, which "might leave NATO's eastern front vulnerable and cause a crisis within the EU and European NATO". However, he warned of "chaos" if European states do not show enough unity and determination.

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. “Uncertainty is deterring business investment and threatening to curb supply for years to come. 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. 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.
We then set out how the economic shock from the invasion had been reflected in our forecast as well as several potential channels through which the invasion could affect the UK economy that our forecast did not explicitly capture. This is partly due to the relatively large share of services in UK output and relatively large shares of energy-intensive manufacturing in some other countries (Chart C). However, 76 per cent of the UK’s gross consumption comes from gas and oil compared with a European average of 57 per cent.

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