With the Ukraine reporting several explosions at its military bases and near major cities, Russia’s invasion brings further chaos and uncertainty to EU markets and threaten global economic recovery post-pandemic, while the UK and much of Europe are working through a significant recession.
The last few weeks of tension and border threats have already sent oil and gas prices soaring, two of Russia’s major exports to Europe, Britain, and the USA, and violent conflicts will lead to massive disruptions to oil and gas supplies.
The USA and NATO are currently considering several sanctions against Russia in response to their invasion and violence against the Ukraine, looking to limit Russia’s financial assets and technology trade. Possible sanctions look set to cut Russia out of Western markets, blacklisting Russian banks and financial institutions, particularly those established in London, restricting Russia’s ability to access international payments, and possibly setting travel bans and embargoes on certain products for trade. Germany has already halted permissions for the Nord Stream 2 pipeline, but as Europe exports 40% of its natural gas from Russia, the supply of crucial materials to the EU is seriously impeded by the Ukraine – Russia conflict.
The sanctions could cause damaging disruptions for Europe and the UK. Blocking Russian banks could threaten Western investments in their institutions, stock, and businesses. Placing trade embargoes on Russian will impact international exports, interrupting Western economic recovery. The biggest risk of sanctions against Russia is putting Europe’s oil and gas supplies in jeopardy, which could ultimately cripple the EU markets and trade.ru
Amid the current recession, the rising oil and gas prices in the UK will hurt small-to-medium-sized businesses still reeling from COVID-19. Although the UK only imports 3% of its gas from Russia and our main oil supplier is Norway, as European countries look to find alternative sources for their own oil and gas needs, the market prices will continue to soar. Coupled with the rising cost of living, SMEs may find themselves drowning in rising bills.