UkraineRussia war latest Hungary signals major shift in Ukraine funding stance Russia claims it has taken control of Kharkiv village

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. Those 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.

• 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.









• Peter Ricketts, the UK’s former national security adviser, joined us to discuss the Ukraine crisis.









• 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.









• The war that erupted in eastern Ukraine in 2014 has already left 14,000 dead and an estimated 1.4 million displaced.









• 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.









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

"We live in an unstable world. If rich counties fail to support vulnerable countries in tackling climate impacts and in their clean energy transition, it will only fuel a spiral of instability." However, as indicated above, if financial sanctions are extended such that they disrupt energy trade, this could lead to more profound economic impacts for the UK and other European countries. Including Gazprombank and Sberbank, another majority state-owned bank, in the SWIFT ban could further disrupt the energy trade. Many of the sanctions imposed on Russia’s financial system so far exclude transactions related to energy and agriculture. If sanctions were to go further, for example by including Gazprombank (a key bank for Russian energy conglomerates) in the SWIFT ban, European countries may have difficulty paying Russian firms for gas, which could result in a reduction in supply.

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.

'Orthodoxy' is not the issue: the Treasury’s outsized power creates problems for government

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.

• 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.









• But European governments could go further and force non-critical industries to shut down or mandate a reduction in use of gas in commercial/office buildings and homes.









• The UK government is providing a range of economic, humanitarian and defensive military assistance to Ukraine, and is imposing additional sanctions on Russia and Belarus.









• 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.

Russia’s invasion of Ukraine has profoundly changed the calculus in deciding where to invest and where to cut. That means extremely difficult choices for a Treasury gearing up for retrenchment and conscious that protecting military budgets means cuts would fall even more heavily on public services, themselves in desperate need of more investment. As prime minister Boris Johnson promised to increase defence spending from an existing 2% to 2.5% of GDP; his successor Liz Truss went further by committing to 3%. This shift in approach to resourcing Russia and Ukraine is noticeable, and the UK can consider its response to the war so far a diplomatic success.

How does the Russian invasion of Ukraine affect the UK economy?

Hungary previously said it would block further financial aid to Ukraine, but this morning suggested it was ready to compromise after the EU reportedly drew up plans to hit Budapest's economy. Hungary has signalled it is ready to compromise on EU funding for Ukraine - after Brussels reportedly prepared to sabotage its economy if it did not comply. Meanwhile, Moscow has claimed its forces have taken control of the village of Tabaivka in Ukraine's northeastern Kharkiv region. "I was clear about the tragic consequences that any invasion of Ukraine could have for all people - both Ukrainian, Russian and the security of Europe," Mr Wallace said of his meeting with the Russian defence minister. If Russia did decide to invade Ukraine, the senior Western intelligence official said large numbers of people would be displaced.

All of this disruption could massively increase the price of gas in Europe and, consequently, the UK. But we now see more clearly that, in a crisis, for the foreseeable future UK interests are aligned with the US and Europe, especially if China aligns itself more with Russia. The revival of NATO’s purpose and a unified western response have been a necessary if painful reminder of where UK interests truly lie. 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.

Russia’s invasion of Ukraine demands that the UK rewrite its foreign policy

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.

• While a line may now thankfully be drawn under the pandemic's economic hit, the inflationary cloud is now looking very dark indeed.









• 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.









• "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.









• President Biden's virtual meeting with President Putin earlier this week was a start and will be followed up by more talks with other Nato members.

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.

• 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.









• The devastation was felt most acutely in Kharkiv, where an apartment block was hit, killing two people, and injuring 35 residents.









• The predictions – contained in the OECD’s half-yearly economic outlook – represent a sharp downgrade from the estimated 4.7% growth this year and 2.1% next year made six months ago.









• Western countries have rejected this and instead put forward other suggestions, such as cutting back nuclear weaponry.









• 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.

But European governments could go further and force non-critical industries to shut down or mandate a reduction in use of gas in commercial/office buildings and homes. In a scenario where there is relatively little disruption to energy supplies, the main impact on the UK and other European economies is comes from uncertainty on gas prices. So far gas has continued to flow from Russia to Europe (including via Ukraine) during the conflict, though wholesale prices have increased significantly. The UK imported around 13% of its total fuel (oil, gas, LNG, electricity) from Russia in 2019.

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.

• If the US abandons the military alliance, it will fall to European countries to ensure a Ukrainian victory, Mr OBrien says.









• The latest data for January 2022 shows that the UK economy is now stronger than it was before the pandemic.









• 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 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.









• 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).









• 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.

Unnamed Indian government sources have suggested India wants to distance itself from Russia, according to Reuters news agency. Mr Szijarto will be in the western Ukrainian city of Uzhhorod with his Ukrainian counterpart Dmytro Kuleba and presidential chief of staff Andriy Yermak. "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. He says Europe is rich enough to do so if it has the political will, pointing to a recent report from the Estonian Ministry of Defence suggesting that committing 0.25% of GDP annually towards Ukraine would provide "more than sufficient resources".