Notes

Five ways Russias invasion of Ukraine has changed UK government
It followed the Kremlin ordering troops into the rebel-held Ukrainian regions of Donetsk and Luhansk on recognising them as independent. Russia's invasion of Ukraine is a "catastrophe for our continent", Prime Minister Boris Johnson has said. Asked about the UK's accusations that Russian President Vladimir Putin was plotting to install a pro-Moscow figure to lead Ukraine's government, Ms Truss declined to elaborate on the source of the intelligence. Foreign Secretary Liz Truss said the British Embassy in Kyiv continued to operate but "it's important that we prepare for any eventuality".

According to a 2022 YouGov poll, only one in five Britons would volunteer for service in the event of an invasion. He chaired an emergency Cobra meeting earlier and will give a televised statement later on the UK's response to Russia's "unprovoked attack". Around 900 British troops are stationed in Estonia under Operation Cabrit, the UK’s contribution to Nato’s Enhanced Forward Presence in the Baltic states, which some fear could also be targeted by Mr Putin. One risk is that leaks and arguments about the size of the army, military procurement and GDP percentages distract from a serious reckoning on what a new war in Europe means for the post-Cold War ‘peace dividend’ that has benefited us all. Earlier, the prime minister said on Twitter that the invasion was a "catastrophe for our continent".
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. 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. 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. 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).

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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. 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. Nato Secretary General Jens Stoltenberg criticised Russia's "reckless" attack on Ukraine and said despite weeks of tireless international diplomacy, Russia had chosen "the path of aggression". European Commission President Ursula von der Leyen accused Mr Putin of "bringing war back to Europe" and warned a raft of "massive" sanctions would be proposed later aimed at Russia's economic base and its "capacity to modernise". On Wednesday, the UK announced a package of sanctions against Russia as part of a co-ordinated Western response to the crisis. At least seven people are known to have been killed by Russian shelling, including civilians.


The conflict in Ukraine offers a glimpse of how Britain might prepare for self-defence. Checkpoints and pillboxes would be built at motorway junctions and city entrances. https://euronewstop.co.uk/when-will-the-war-in-ukraine-end.html and metro stations would be used as air raid shelters, while anti-aircraft guns might be hidden in parks. Right now, such scenarios tend to exercise only the minds of Ministry of Defence war-gamers and military thriller writers. But far-fetched as they might sound, General Sir Patrick Sanders, the head of Britain’s army, believes it is time we dwelt on them more. After an uneasy peace with Ukraine, Moscow has sent forces into the Baltics, clashing with British troops based there to protect Nato’s eastern flank.

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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. Permanently higher energy prices could deliver an adverse supply shock that reduced potential output in the medium term, which in turn would damage the structural fiscal position. In addition to capturing these impacts on the UK economy forecast, there is a smaller, though significant, impact on the fiscal forecast from lower UK equity prices, which have fallen in the wake of the Russian invasion. 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. Writing on Twitter, he added the US and its allies and partners would impose "severe sanctions on Russia" and continue to provide support to Ukraine and its people. The latest move by Russia has drawn international condemnation, with US President Joe Biden denouncing Russia's military action as an "unprovoked and unjustified attack", declaring "the world will hold Russia accountable".

This means were Russia to attack a neighbouring Nato state such as Estonia, Latvia or Lithuania, for example, it would then be at war with all 31 Nato members. Mr Szijarto will be in the western Ukrainian city of Uzhhorod with his Ukrainian counterpart Dmytro Kuleba and presidential chief of staff Andriy Yermak. In fact Johnson emphasised that this problem affects the whole of the continent, by describing Russia’s intimidation tactics as Europe’s “biggest security crisis” for decades. 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.
The head of the British army has warned UK citizens to be prepared for a war on the scale of the great conflicts of the 20th Century – and that they themselves may need to mobilise. Keir Giles, a senior consulting fellow in the Russia and Eurasia programme at Chatham House, said it is possible that Russia has already sabotaged UK infrastructure at sea. However, security services would be unlikely to publicly attribute damage to Russian attacks. 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. Moscow has claimed its forces have taken control of the village of Tabaivka in Ukraine's northeastern Kharkiv region.

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Mr Johnson was among leaders of the G7 group of wealthy nations who met to discuss the situation. Earlier, the prime minister said on Twitter that the invasion was a "catastrophe for our continent". The prime minister also sought to reassure the British public, pledging to do "everything to keep our country safe" and work with allies "for however long it takes" to restore Ukraine's sovereignty and independence.


According to a 2022 YouGov poll, only one in five Britons would volunteer for service in the event of an invasion. While Covid was a useful exercise in Armageddon planning, 21st-century Britain is arguably less ready for actual warfare than it was even 30 years ago. At the end of the Cold War, most of the 100-strong network of nuclear bunkers were closed, along with around 1,500 underground posts for the Royal Observer Corps, a 10,000-strong volunteer force. As fighting intensifies, cross-Channel shipping is attacked by Russian submarines, and long-range conventional missiles strike Dover and Southampton. Somewhat confusing the situation is the fact that most Ukrainians are able to speak or easily understand both Russian and Ukrainian.


A Ukrainian presidential adviser said that more than 40 soldiers had died and dozens more were wounded, but this has not been independently confirmed. Russia has seized Ukrainian territory before, when it annexed Crimea in 2014, following fierce protests in Ukraine that toppled the country's pro-Russian president. Russian forces seized control of Crimea before the territory voted to join Russia in a referendum the West and Ukraine deemed illegal. He said the UK was "leading on creating a package of economic sanctions" against Russia and was supplying defensive weaponry to Ukraine. In a pre-dawn TV statement on Thursday, President Putin said Russia did not plan to occupy Ukraine, but demanded its soldiers lay down their weapons, before warning that Moscow's response would be "instant" if anyone tried to take on Russia.

Wall Street Journal reporter Evan Gershkovich has lost an appeal against his arrest, Russian state news agencies report. 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 Ukrainian presidential adviser said that more than 40 soldiers had died and dozens more were wounded, but this has not been independently confirmed. But be we warriors or wimps, now is the time to start facing up to the prospect, says Ed Arnold, a European Security Fellow at the Royal United Services Institute. Last week, after President Putin ordered the first Russian troops into Ukraine, the Prime Minister confirmed the UK would sanction three wealthy allies of Vladimir Putin and five Russian banks.
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. 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.

A source told BBC political correspondent Nick Eardley the meeting was "tempestuous" and ended early after Ms Truss said the ambassador should be "ashamed" of Russia's behaviour in Ukraine, adding that the Kremlin had lied repeatedly. Foreign Secretary Liz Truss summoned Russia's ambassador to the UK, Andrei Kelin, for the second time this week to ask him to explain the "illegal, unprovoked invasion of Ukraine". "Because this act of wanton and reckless aggression is an attack not just on Ukraine, it's an attack on democracy and freedom in eastern Europe and around the world." Ukraine has imposed martial law across the country, meaning the military has taken control temporarily, and traffic jams have built up as people attempt to flee Kyiv.


"But if Central/Eastern Europe felt abandoned by those powers, it's not hard to imagine a Polish or even a Ukrainian nuclear program." However, he warned of "chaos" if European states do not show enough unity and determination. "The document referred to in the Financial Times article is a background note written by the secretariat of the council under its own responsibility which describes the current status of the Hungarian economy," the statement by the senior EU official said.

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