Economic sanctions on Russia will hit our pockets as well

The rouble may be in a tail spin this morning, and Russian banks may have more than doubled interest rates, but it is not just the ordinary citizens of Putin's Russia who are going to suffer from the economic sanctions imposed on it.

Russia and Ukraine are major suppliers of the raw materials and energy on which our economy and that of the rest of the world is built. It is inevitable that there will be shortages and price hikes greater than those already envisaged as part of the cost of living crisis.

The Independent reports that the foreign secretary has admitted that sanctions imposed on Russia in retaliation for the invasion of Ukraine will make the domestic cost of living crisis worse:

Liz Truss said Britain must be prepared to take an “economic hit”, but insisted it would be “far worse” to allow Vladimir Putin to succeed in his military offensive in Ukraine.

As pressure builds for further sanctions against the Kremlin, the foreign secretary said the UK government was drawing up a “hit list” of oligarchs whose property and assets would be targeted.

Earlier this week, No 10 imposed asset freezes on several Russian banks, airlines, and billionaires associated with the Kremlin, and said that sanctions would be targeted personally at the Russian president.

Over the weekend, the US, the UK and the EU also agreed to ban “selected” Russian banks from the global payments system Swift, which connects thousands of financial institutions around the world.

“We are taking apart every bit of the Russian system,” Ms Truss told the BBC’s Sunday Morning programme.

But asked about the domestic toll, and whether the cost of living would rise even more, the cabinet minister replied: “That is correct. That is correct. But the pain that we will face in the United Kingdom is nothing like the pain people in Ukraine are currently facing.”

She added: “They are having to take up arms in the face of an appalling dictator using untold weapons on their country, and that is what we have to remember.

“We aren’t just fighting for the people of Ukraine and the sovereignty of Ukraine, we’re fighting for freedom and democracy, and that has a very high cost for us.

“It is right that we are prepared to take an economic hit, because the alternative of allowing Putin to succeed will be far worse for peace and democracy across Europe.”

If anything, this admission makes it even more important that the UK Government takes mitigating measures to relieve pressure on hard-pressed families in the UK. 

The case to abandon the hike in national insurance, abolish VAT on domestic fuel bills, and levy a windfall tax on the mega-profits of the oil and gas companies has never been stronger.