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The government issued an update yesterday on the economic, humanitarian and defensive military assistance…

   News / 02 Mar 2022

Published: 02 March 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight

The government issued an update yesterday on the economic, humanitarian and defensive military assistance it is giving to Ukraine, and the sanctions it is imposing on Russia and Belarus. These include:

  • Providing up to £220 million in humanitarian aid
  • Placing 1000 troops on standby in neighbouring countries, including Poland, and continuing to work with international partners to supply vital weapons to the Ukrainian Armed Forces
  • Extending the family visa system to support British nationals and their families who usually live in Ukraine, and Ukrainians in the UK and their families, and creating a new sponsorship scheme so organisations and individuals can sponsor Ukrainians without UK ties to come to Britain.

Russian-born media mogul and House of Lords member Evgeny Lebedevhas broken his silence on the invasion of Ukraine, writing an open letter to Vladimir Putin to urge him to end the war. The front page of Monday's Evening Standard newspaper, which Lord Lebedev owns as well as the Independent, carried his 200-word letter. "President Putin, please stop this war", the headline read, with Lord Lebedev pleading with the Russian president to "stop Russians killing their Ukrainian brothers and sisters". The letter appeared on the same day Downing Street urged prominent Russians to speak out against Putin's war, stressing the importance of unified condemnation.
Russia/Ukraine Corporate Sanctions Roundup: 

  • Centrica Plc plans to exit its gas supply agreements with Russian companies, principally Gazprom’s trading unit, “as a matter of urgency”, the UK energy supplier’s CEO has said.
  • ExxonMobil will exit a multi-billion-dollar joint venture with Russian state-owned company Rosneft, following the path set by BP, Shell and Equinor, and halt new investments in the country. ExxonMobil currently operates and holds a stake in the Sakhalin Island oil and gas fields, alongside Rosneft and companies from Japan and India. Its Russian oil and gas operations have been valued at more than $4bn (£3bn), and the energy giant employed more than 1,000 people across the country, according to its website. 
  • Petroleum giant TotalEnergies (TE) has condemned Moscow's military aggression against Ukraine saying the invasion has forced it to pull capital from new projects in Russia. The French firm said it supports the scope and strength of the sanctions put in place by Europe and will implement them regardless of the consequences on its activities in Russia. However, unlike BP and Shell, TE has stopped short of divesting all its Russian assets, which include a 19.4% shareholding in Novatek, Russia's second largest gas producer, and stakes in two liquefied natural gas projects controlled by Novatek, including a 20% shareholding in Yamal LNG, a US$27 billion project in Russia's far north that began production in 2017. 
  • Mastercard and Visa have blocked multiple financial institutions in Russia from using their payment networks, effectively rendering both cards and terminals linked to the sanctioned companies useless. Neither company has specified which firms have been restricted. The two have also pledged to contribute $2m in humanitarian relief for Ukraine and have said they will comply with additional sanctions implemented.  [See note 1 below]
  • Boeing, the world’s biggest plane maker, says it had suspended "major operations" in Moscow and temporarily closed its office in Kyiv. "We are also suspending parts, maintenance and technical support services for Russian airlines," a Boeing spokesperson told the BBC. 
  • Apple has suspended all sales in Russia.   
  • Jaguar Land Rover, Britain’s biggest carmaker, has suspended exports to Russia. 
  • Fifa and Uefa have banned all Russian football clubs and national teams from all competitions 
  • The Independent newspaper says Western businesses and fund managers have scrambled to cut ties with Kremlin-linked firms. Nest,which administers the pensions of 10 million people in the UK, says it will sell all its Russian investments “as soon as possible”The UK’s biggest fund manager, £1.3 trillion Legal & General Investment Managementsaid it had sold stakes in Russian companies and was reviewing its policies. Janus Henderson, which has £419bn of assets under management, said it had sold off almost all its Russian investments, with only a “tiny” amount of foreign exchange remaining. Schroders, one of the UK’s largest pension fund managers with £574bn under management, said that it was reviewing its policies and investments towards Russia. Aviva, which has £357bn under management, said it now held less than 0.1 per cent of its assets in in the country. It declined to tell the newspaper whether it had policies preventing its funds investing in firms linked to the Kremlin. Abrdn Investments – which manages more than half a trillion pounds - announced publicly that it “will not be investing in Russia or Belarus for the foreseeable future, on ESG grounds”.

Private equity giant Blackrock has taken a punt on beleaguered Russian gold miner Polymetal, doubling its stake to just over 10% despite the stock taking a battering from sanctions imposed against Moscow, Sharecast News reports. Shares in Polymetal have plunged more than 70% on the London Stock Exchange since the conflict flared up last week and one of Polymetal's largest investors, the huge Norwegian sovereign wealth fund, has said it is divesting its Russian investments. Shares in fellow Russia-exposed miner Evraz have also been battered by the sanctions; they are down by 55% over the last five days, meaning heavy losses for Roman Abramovich, the owner of Chelsea football club, who holds a 30% stake in the company. The dramatic reversal of fortunes for both Polymetal and Evraz means they will shortly lose their prestigious places in the FTSE 100.
Prices in shops rose at their fastest rate in over a decade in February, the British Retail Consortium (BRC) says. Shop price inflation jumped from 1.5% in January to 1.8% in February, according to the BRC-NielsenIQ price index. It marks the highest rate of inflation it has recorded since November 2011. The sharp rise was partly driven by fresh food price rises and higher prices for other goods such as beauty and furniture products.
Fraser McKevitt, head of retail and consumer insight at market research firm Kantar has warned grocery prices are likely to rise as a consequence of the conflict in Ukraine. Ukraine and Russia are both big agricultural producers, with the former often dubbed the “breadbasket of Europe.” Russia and Ukraine supply a quarter of the world’s wheat, and half of its sunflower products, such as seeds and oil, while higher gas prices have a knock-on effect on food through fertiliser and transport costs, McKevitt said. Grocery prices have already reached new highs as inflation hit a nine-year high of 4.3% in February - the fastest rate of inflation recorded by Kantar since September 2013. Analysts at Rabobank, meanwhile, have warned that a full-scale war could impact half of Ukraine’s grains production and double global wheat prices.
The final tranche of pandemic-related support to bus and light rail operatorsacross England has been announced today. They will benefit from over £150 million of government support, and the scheme will run for six months.  The government said the funding package announced yesterday builds on almost 2 years’ worth of unprecedented government support to keep bus and light rail networks running, with a total of around £2 billion having been made available to over 160 operators. Transport Secretary Grant Shapps said on Twitter: “Operators must now work to become financially sustainable as we continue to emerge from the pandemic.”
British factory output grew for a 21st consecutive month in February. The IHS Markit purchasing manufacturing index reading for the period was 58, well above the 50 mark that denotes growth.
UK mortgage approvals rose to 74,000 in January, above the 12-month pre-pandemic average up to February 2020 of 66,700, new data has shown. According to the Bank of England, Brits borrowed £5.9bn in mortgage debt during the month, up from £4bn in December and above the pre-pandemic average of £4.3bn. Yahoo Finance UK says the average asking price increased by 2.3% - or £7,785 - in February to a record £348,804, according to data from property site Rightmove.
Brookfield Asset Management's acquisition of a minority stake in Scotia Gas Networks (SGN) has been cleared by the competition regulator following a short merger inquiry. The Canada-based firm was part of a consortium with the Ontario Teachers' Pension Plan Board that agreed to purchase SGN's 33.3% stake in the gas distribution network for £1.23bn in August last year. On 11 January, the Competition and Markets Authority said it was considering whether the transaction would result in a "substantial lessening of competition" under the Enterprise Act.
Online betting and gaming company 888 UK Limited has been fined £9.4m by the Gambling Commission for social responsibility and money laundering failures. 888, which operates 78 websites, has also received an official warning and will undergo "extensive" independent auditing. It is the second time the FTSE 250 business has been fined. In 2017, it was forced to pay out £7.8m for failing vulnerable customers. The latest social responsibility failures included: not effectively identifying players at risk of harm;  not taking into account the Commission's formal guidance on customer interaction; giving a customer they knew was an NHS worker earning £1,400 a month a monthly deposit cap of £1,300. Money laundering failures included: implementing a policy where customers were allowed to deposit £40,000 before carrying out source of funds (SOF) checks; accepting verbal assurances from customers as to employment income; and not setting out which documents should be requested as part of SOF checks.
Sainsbury's has revealed plans to close 200 in-store cafes, putting some 2,000 jobs at risk. 67 Sainsbury's cafes will stay open while the supermarket major conducts a review of its estate as part of a wider shake-up plan which will see another 30 Starbucks cafes and 30 further "The Restaurant Hubs" (which sell food and drink from chains including Carluccio's and Gourmet Burger Kitchen) installed in store within the next year. Sainsbury’s said staff affected will be prioritised for vacancies in other parts of the company.
A consortium comprising Bain Capital and CVC Capital Partners has apparently declined to submit an offer for high street chemist Boots. According to Sky News, the consortium - one of the leading contenders to buy Boots - has now paved the way for a takeover by supermarket chain Asda, although Apollo Global Management and Sycamore Capital are also among those still interested. Sky said indicative offers worth more than £6bn were understood to have been submitted last week.
In the year to the end of December 2021, builders' merchant Travis Perkinsswung to a full year
pre-tax profit of £305.6m, up from a loss of £20.3m the year before. Revenue was up 24% at £4.6bn. Compared with 2019, revenues were ahead 10.6%.
American aerospace and defence giant Lockheed Martin has outlined plans to invest more than £50 million building a new space systems research and manufacturing plant in the North East. The investment is expected to create 2.300 jobs.
A cargo ship that was carrying thousands of luxury cars has sunk off the Portuguese Azores archipelago, nearly two weeks after it caught fire. The ship, named Felicity Ace, was transporting around 4,000 cars such as Porsches and Bentleys from the German port of Emden to Rhode Island in the United States. Volkswagen said the damage to the vehicles was covered by insurance which could cost around $155m (£116m) according to Reuters. Bentley confirmed that 189 of its cars were onboard the ship and Porsche said it had about 1,100 of its models onboard. All crew members were evacuated safely when the fire broke out on February 16.

[1] NB: The Central Bank of Russia operates a self-contained card payment system called 'Mir', which was set up to combat sanctions imposed after Russia's annexation of Crimea in 2014. As of October last year, there were more than 100 million Mir cards in circulation, as Russian banks have gradually transitioned from the US-based Visa and Mastercard systems to the platform.

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