The situation in the Ukraine is something that dominates much of the news agenda. There is, rightly, international condemnation of Russia’s intervention in Ukraine and the EU response has been to introduce sanctions against Russia, to try to influence their behaviour. It is hoped that this will have an effect on the outcomes in Ukraine, but what does all this mean to people living in the UK and Wyre Forest?
Actually, in the broadest sense, not a huge amount. The sanctions will have an effect where the Russians do business in the UK and on those businesses that trade with Russia. But even then, whilst there are many established UK based relationships with Russia, and much private Russian wealth invested in the UK, including central London property, the size of Russian interests is small compared with our economic relationships with the rest of the world. Much of this, even if it does have a local effect in the south east, will have a vanishingly small effect in the west midlands.
However, there are a couple of areas that are of some concern. Our long term relationship with Russia is not as good as that of some of our EU neighbours. Whilst sanctions are EU wide, we are coming at them with a less than perfect existing relationship and that may cause problems further down the line for UK business interests once the sanction period is over.
More importantly, though, is the effect on fuel prices. Russia produces around 10% of the world’s oil production and sells gas into Europe, including Ukraine. There is a very genuine fear that the Russians could turn off the taps and cause a spike in the world oil prices. They could even cut off supply to Europe. Indeed, they have already cut off supply to Ukraine, but that was more to do with the fact that Ukraine had not paid their gas bills.
The UK does not buy any Russian gas, but our neighbours do. The risk for us here in Wyre Forest is that brinkmanship and sanctions in the area of energy prices could result in higher local energy prices – something that is absolutely not what we want with households hard pressed as we come out of the great recession. We are coming into the warm period, but if this crisis is not resolved, there may be higher energy prices coming.