Notes

Emmanuel Macron angered Britain by sending mixed messages to Putin, Liz Truss reveals
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.

"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. Moscow has claimed its forces have taken control of the village of Tabaivka in Ukraine's northeastern Kharkiv region. 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. While a line may now thankfully be drawn under the pandemic's economic hit, the inflationary cloud is now looking very dark indeed.
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.

Truss reveals Downing Street’s fury at Macron for keeping Putin on speed dial
In a joint news conference with Nato secretary general Jens Stoltenberg, Mr Johnson said Europe faced its biggest security crisis in decades. https://squareblogs.net/racingden14/what-if-russia-wins-the-war-in-ukraine to Moscow does not signal any significant shift in the balance of this crisis. But his meeting with Russian defence chiefs does seem to have been a calmer affair than Thursday's frosty exchanges between the foreign ministers, Liz Truss and Sergei Lavrov. The current tensions come eight years after Russia annexed Ukraine's southern Crimea peninsula.

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. 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. The latest data for January 2022 shows that the UK economy is now stronger than it was before the pandemic. "The nightmare scenario would be that the states close to Russia double down on aid to Ukraine while those farther west decide to force a deal on Putin's terms. Then Europe itself could fracture," he says.
The government's independent advisory Climate Change Committee recently warned that any new North Sea projects will take an average of 28 years to start producing oil and gas. The ‘global’ in Britain was reflected in an ambition to more deeply engage in the Indo-Pacific, to adapt to China’s growing power and climate and global health objectives. Another risk is that Sunak’s can-kicking over budgets postpones the serious investment needed in military supplies. Western materiel and equipment are being depleted at a rapid rate on the battlefields of Ukraine, leading to concerns that neither government nor industry have moved to the war-footing required for resupply. Serious discussion of defence spending, procurement and supply will be a new reality for the government for years to come. The Russian invasion displaced Ukrainians who, fleeing the conflict, became refugees in need of accommodation and support.

Where does the UK get its energy from?
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.


"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. 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.


Almost 20% of the UK's vegetable product imports come from there, according to UN Comtrade data. At first glance, it appears that the UK will easily be able to weather the economic fallout from the war as neither Russia nor Ukraine are big trading partners. There is also expected to be a considerable jump in the prices we pay at the supermarket and petrol pump. Despite this, Mr Dales still expects the Bank of England to increase interest rates at its meeting on Thursday next week, with the main Bank rate likely to rise from 0.5% to 0.75%. "GDP bounced back from the hit it took in December due to the Omicron wave and is now 0.8% above its pre-pandemic peak," he said. UK households were already facing sharply rising costs before Russia's invasion of Ukraine, in part due to soaring energy costs.


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.

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. This included £2.5 billion in military support and a historic long-term security agreement. 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.
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.


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.

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