![The City of London financial district.](https://media.guim.co.uk/ceb023cfd80d3678782885a206097ce69c350875/0_0_3500_2100/1000.jpg)
Closing post: G7 hit Russia with tariffs; UK GDP rises
Time to wrap up - here are today’s main stories:
Western governments have announced plans to impose punitive tariffs on Russian trade to further isolate Moscow from the global economy after the invasion of Ukraine.
In a development aimed at ratcheting up the pressure on Vladimir Putin, the G7 group of wealthy nations said it would strip Russia of “most favoured nation” (MFN) status under World Trade Organization (WTO) rules.
Setting out tougher measures in response to Putin’s military aggression in a joint statement on Friday, the G7 said a “broad coalition” of WTO members were preparing to revoke important benefits of Russia’s membership.
The G7 is formed of the US, UK, Canada, France, Germany, Italy and Japan, and says:
“We are united in our determination to hold President Putin and his regime accountable for this unjustified and unprovoked war that has already isolated Russia in the world,”
The 10-strong board of directors of Evraz, the steel and mining group in which Roman Abramovich controls a 29% stake, have resigned after sanctions were imposed on the Russian oligarch and shares in the company were suspended.
Evraz’s 10 remaining non-executive directors – which include the former Ford executive Stephen Odell and Sir Michael Peat, a former private secretary to Prince Charles and whose family name is the p in KPMG – have now all resigned.
Canada is imposing sanctions on five individuals including Abramovich, and also barring 32 Russian companies and government entities from receiving defense equipment or supplies from Canada.
Cigarette group BAT is pulling out of Russia, just two days after deciding to keep producing tobacco products there.
The UK economy made a better-than-expected recovery from the disruption of the Omicron variant.
UK GDP rose 0.8% in January, beating forecasts, with a return to dining out boosting the services sector. Construction and production also grew, despite ongoing supply chain problems.
However, several economists predicted that growth would weaken this year due to rising inflation and the Ukraine war.
Chancellor Rishi Sunak said Russia’s invasion of Ukraine is creating “significant economic uncertainty” - as he weighs up whether to offer more support in this month’s spring statement.
The UK and EU have launched an investigation into whether Google and Meta colluded in the online display advertising space.
UK farmers have warned that soaring gas costs could force producers to cut output, adding to concerns over shortage and rising prices.
Minette Batters, the president of the NFU, said the war had “focused attention on the importance and fragility of food security, both at home and abroad”.
Batters said:
“There are some clear short and long-term actions that government can take to maintain confidence and stability across the UK’s food producing businesses.
We have shared these with government and we want to stress that we stand ready to take these forward together, in order to navigate the extreme volatility we see today and expect to grow in the coming months.”
The founder of the housebuilder Redrow has promised to pay for 1,000 Ukrainian refugees to come to the UK.
Steve Morgan also criticised the government for its slow response to the humanitarian crisis created by Russia’s invasion.
US private equity group Apollo is considering launching a takeover offer for educational publisher Pearson, after two approaches were rebuffed:
Heathrow is to hire 12,000 staff to handle an expected summer holiday boom, the UK’s busiest airport has said, as it warned the recovery in the aviation industry is “being overshadowed by war and Covid”.
Uber fares across the UK are set to rise sharply from Monday night when VAT of 20% will be applied to rides booked via the app.
Goodnight. GW
European stock markets also closed higher, led by a 1.4% rise on Germany’s DAX share index.
📊 Fechamento da Europa:
— MyCAP Investimentos (@mycapinvest) March 11, 2022
🇪🇺 STOXX 600 0,95%
🇬🇧 FTSE 100 0,8%
🇮🇹 FTSE MIB 0,68%
🇪🇸 IBEX 35 0,9%
🇵🇹 PSI 20 1,51%
🇫🇷 CAC 40 0,85%
🇩🇪 DAX 1,38%
Reports that Russia’s president Vladimir Putin has said there were “certain positive shifts” in negotiations with Ukraine (without giving details), may have cheered markets.
But any optimism seems out of kilter with fears Moscow could use chemical and biological weapons, and the US’s push to remove Russia’s “most favoured nation” trading status.
As Chris Beauchamp, chief market analyst at online trading platform IG, puts it:
“Investors might find that trying to build a rally on comments from Vladimir Putin is a bit of a fool’s errand, but that has been the theme of the day,”
Updated
FTSE 100 closes higher
In the City, the FTSE 100 index has ended the day up 0.8%, after January’s GDP report showed the UK economy grew faster than expected.
Educational group Pearson ended as the top riser, up 18%, after saying it had rejected takeover approaches from private equity group Apollo. Russian gold and silver miner Polymetal gained 12%, but is still down 88% this year following the Ukraine invasion.
Hospitality and holiday companies also saw gains, with Intercontinental Hotels 3% higher. Engineering group Melrose, whose aerospace division will benefit from a pick-up in travel, jumped 7%.
For the week, the FTSE 100 gained 2.65%, its best weekly gain in 11 months. But that’s only a small recovery on last week’s 6.7% tumble when the Ukraine war sent shares reeling.
British American Tobacco put its sudden change of heart on Russia down to its “ethos and values”, my colleague Rob Davies writes:
The owner of brands including Rothmans and Lucky Strike said it would pull out of Russia after all, two days after breaking ranks with companies such as Nestlé, Unilever, Coca-Cola and McDonald’s by refusing to quit its operations there.
A string of big corporations have halted operations in Russia as part of the global response to the invasion of Ukraine but BAT had previously said that, while it would scale back some of its activities, it would not stop selling its products.
On Friday afternoon, the London-based company said it would go further.
Tobacco group BAT to exit Russia
British American Tobacco is quitting Russia, just two days after saying it would continue to sell products in the country.
Having reviewed its presence in Russia, the maker of Rothmans and Lucky Stripe says it has conclued that “BAT’s ownership of the business in Russia is no longer sustainable in the current environment”.
It will now rapidly tranfer its Russian business “in full compliance with international and local laws”.
Beyond continuing to pay our 2,500 employees, we will do our utmost to safeguard their future employment.
Upon completion, BAT will no longer have a presence in Russia.
The company has a cigarette factory in St. Petersburg, 75 regional offices, and a Moscow HQ. On Wednesday, it said its business in Russia will keep operating, while it would end capital investment and scale back marketing.
Today’s change of heart will hit BAT’s sales and profits this year.
It has lowered its annual revenue growth outlook to 2%-4%, down from 3%-5%, and also cut its forecast for earnings per share growth.
BAT to exit Russia. pic.twitter.com/3SWn3vp5Jz
— Neil Hume (@humenm) March 11, 2022
won't be the last
— Neil Wilson (@marketsneil) March 11, 2022
BATS cuts guidance expect constant currency revenue growth of 2% to 4% and Mid-Single Figure constant currency adjusted diluted EPS growth. In 2021, Ukraine and Russia accounted for 3% of Group revenue
Biden: US and allies to deny 'most favored nation' status to Russia
In Washington, Joe Biden has announced that the US was moving to revoke Russia’s “most favored nation status” in coordination with allies, as flagged earlier.
Revoking Russia’s permanent normal trade relations will “make it harder for Russia to business with the United States”, the president explained. He said the US was “taking the first steps” to ban imports of Russian vodka, seafood and diamonds.
Biden thanked Pelosi for pushing the US to take this action, and for holding off on a measure in Congress until he “could line up all of our key allies.”
“Putin is the aggressor and Putin must pay a price,” he said.
Our US Politics Live blog has full details:
UK fuel prices hit record highs again, as the surge in crude oil prices continues to hit motorists.
Unleaded petrol hit £1.61 a litre on Thursday, up from £1.51 per litre at the start of March, while diesel reached £1.70 a litre.
The jump in fuel prices has added to the cost of living squeeze, but the AA is hopeful that pressures could ease soon.
AA fuel price spokesman Luke Bosdet said a rush to fill up tanks when the invasion sent crude prices surging could have pushed prices up:
“A slump in the oil price over the past two days has dragged the wholesale cost of petrol and diesel down with it - too late to influence pump prices this weekend but sufficient to offer the hope that pump prices may now level off and hopefully fall somewhat.
“Ironically, motorists rushing to fill up and beat pump price surges the weekend before last may have accelerated pump price rises, as stock turned over faster than normal and higher costs worked their way through to the pump sooner than normal.”
Cost of living: Record prices 'may ease soon' but unleaded passes 160p and diesel hits 170p https://t.co/APmHeccs0Y
— Sky News (@SkyNews) March 11, 2022
Brent crude is trading around $112 per barrel today, having hit 14-year highs of $139/barrel on Monday.
But, Brent is still up over $30 per barrel, or 40%, so far this year, and was below $100/barrel before the invasion of Ukraine two weeks ago.
G7 nations draw up plans to impose heavy tariffs on Russia
Western governments are drawing up plans to impose punitive tariffs on Russian trade amid efforts to further isolate Moscow from the global economy after the invasion of Ukraine.
In a development aimed at ratcheting up the pressure on Vladimir Putin, the G7 group of wealthy nations is considering options to strip Russia of “most favoured nation” (MFN) status under World Trade Organization (WTO) rules.
Such a move would mean imposing tariffs – border taxes paid by importers – on Russian products such as vodka and other goods. Designed to raise the price of goods to discourage trade, tariffs hit exporters but can also add to consumer costs.
Sources said an announcement by the G7 could come as early as Friday, although they also stressed that a desire to maintain international unity and to coordinate sanctions could see the details announced at a later stage.
It comes as the US pushes for tougher action against the Kremlin, with sources telling the Reuters news agency that Joe Biden would use a statement on Friday to remove Russia’s “permanent normal trading relations” with the US – the term used by Washington for MFN status.
The US currently only excludes two countries from this designation: Cuba and North Korea. Rather than tariffs at the current applied rate in the US of about 3% on average across Russian goods, the border tax would increase to more than 10 times that level.
Nestlé has suspended shipments of non-essential products to and from Russia, but unlike many other multinationals it’s not halted business completely.
The world’s largest food company will still supply Russians with essential items, including baby food, cereals, nutritional products and “therapeutic pet foods”.
But other products, such as Nespresso coffee pods and S.Pellegrino water, won’t be imported.
Exports of non-essential goods from Russia are also suspended, but Nestlé will continue to ship essential items, such as baby food, from Russia to other Commonwealth of Independent States countries (former Soviet Union members).
Advertising and capital investment has also been frozen, with Nestlé saying:
As a food company and employer, we recognize that we also have a responsibility toward our more than 7,000 employees in Russia — most of whom are locals.
We will continue to do our utmost to ensure a reliable supply of safe and essential food products for the local people.
Nestle has suspended shipments of non-essential products to Russia, another step by a European multinational to scale down its business in the country after the invasion of Ukraine https://t.co/SisaiyOz6W
— Bloomberg (@business) March 11, 2022
Russian travelers use Serbia loophole to reach Europe
Serbia is being used as a backdoor route by Russian travelers to visit resorts and cities in Western Europe, circumventing airspace closures.
Travel data firm ForwardKeys has found that seat capacity from Russia to Serbia jumped 50% in the first week of March, compared to levels before the Ukraine war began.
Serbia has become a hub for onward travel from Russia to places such as Cyprus, France, Switzerland, Italy and elsewhere, says ForwardKeys.
Around 60% more flight tickets were issued for travel from Russia to another destination via Serbia in the week immediately after the invasion than in the whole of January.
ForwardKeys also reports that the Ukraine invasion has hit European flight demand. Flight bookings within Europe fell 23% in the first week, with destinations closest to the conflict worst affected. Bookings from the US to Europe were down 13%.
Olivier Ponti, VP Insights at ForwardKeys, said:
“Russia’s invasion of Ukraine has made an immediate impact, stalling what had been a strong recovery in travel since early January. What I find surprising is that transatlantic travel and western European destinations have been less badly affected than I feared – North Americans can tell the difference between war in Ukraine and war in Europe, and so far, it seems that travellers regard the rest of Europe as relatively safe. There is also strong pent-up demand.”
“What’s most notable is the speed with which Serbia has become the gateway for travel between Russia and Europe. However, these are early days in a global political and economic crisis; so, what happens to travel will certainly be affected by the progress of the war and the impact of sanctions.
In our latest analysis, we've shown how Serbia becomes the gateway to Europe for travel from Russia. Read it here: https://t.co/xVxTirR54R #TravelResearch #TravelData #RussiaUkraine pic.twitter.com/lE3wonWmm0
— ForwardKeys (@ForwardKeys) March 10, 2022
Inflation in Brazil has hit a seven-year high as the cost of living crisis intensifies.
Prices increased 10.54% in the year to February, ahead of expectations, with monthly inflation rising to just over 1%.
Statistics body IBGE reported that the prices all groups of products and services increased in February, led by education (up 5.61% in a month) and food and beverages (up 1.28%).
The move shows the broad inflationary pressures in the economy, which are expected to intensify as commodity prices surge due to the Ukraine conflict.
Brazil’s inflation shot past expectations last month just as Russia’s invasion of Ukraine sends global commodity prices soaring https://t.co/3NRsHqKkv6 pic.twitter.com/txf8L4ZbcD
— Bloomberg (@business) March 11, 2022
The founder of the housebuilder Redrow has promised to pay for 1,000 Ukrainian refugees to come to the UK, after criticising the government for its slow response to the humanitarian crisis created by Russia’s invasion.
Steve Morgan, who set up Redrow in 1974 and is now one of Britain’s richest men, said there was no time for delays and urged the government to speed up the process of offering visas to Ukrainians.
“Watching the humanitarian crisis unfold in front of our eyes is absolutely devastating,” said Morgan, a former chairman and owner of Wolverhampton Wanderers.
“We have to stop the suffering and Boris Johnson and Priti Patel have to stop the delays.”
Back in the UK, education group Pearson says it has rejected two “preliminary and highly conditional” takeover approaches from investment firm Apollo.
Responding to Apollo’s announcement that it is considering making an offer (see earlier), Pearson says it rejected one approach from Apollo last November, and a second this week.
The second approach was worth 854.2p per share, valuing Pearson at around £6.4bn.
Pearson says this approach also significantly undervalued the Company and its future prospects.
The Board is confident that the lifelong learning strategy set out in March 2021 will create sustainable, long-term value for Pearson stakeholders and that the results for FY 2021 demonstrated the building momentum as Pearson executes on this new strategic vision.
The Board is also mindful of its fiduciary duties in the event that an appropriate proposal is forthcoming.
Pearson shares are currently up 21%, at 785p.
Canada sanctions Abramovich
![Canadian Prime Minister Justin Trudeau speaking during a news conference in Warsaw, Poland.](https://media.guim.co.uk/e3a19129f23bd9e2f13d35b2f3f5f0cb974af64a/0_424_7243_4344/1000.jpg)
Canada is imposing sanctions on five individuals including billionaire Roman Abramovich, Reuters reports.
Canada is also barring 32 Russian companies and government entities from receiving defense equipment or supplies from Canada, Prime Minister Justin Trudeau said in Warsaw today.
Trudeau told reporters:
“These individuals will be prevented from dealings in Canada and their assets will be frozen.”
Evraz (in which Ambramovich owns a 29% stake) owns metal facilities in Regina, Calgary and Edmonton.
Trudeau said the sanctions are designed so Abramovich cannot “cannot profit or benefit from economic activities in Canada.” However, Evraz’s other employees shouldn’t be adversely affected, and its operations in Canada can continue.
“The sanctions on Russian officials and oligarchs like Abramovich are directed at them so that they cannot profit or benefit from economic activities in Canada or the hard work of Canadians working in companies that they have investments in,”
“We are obviously going to watch carefully but we are confident that this will not impact the hard working Canadians who are doing good work in companies across the country.”
Canada has sanctioned Roman Abramovich shortly after UK sanctions, which said Evraz, the steel conglomerate controlled by RA with significant operations in Canada, could have destabilized Ukraine and supplied Russian military. Evraz Canada didn’t respond to my questions yesterday pic.twitter.com/FjZeRKv70n
— Sam Cooper (@scoopercooper) March 11, 2022
Updated
Q1 all set for solid GDP growth of c.1% q/q, after Jan's data. But brace for a drop in Q2:
— Samuel Tombs (@samueltombs) March 11, 2022
- Health sector output will be much lower after free testing ends in April
- June has an extra bank holiday
- Real disposable incomes will fall sharply, due to ↑energy prices & taxes
NIESR, the economic research institute, predicts UK growth will slow after January’s strong start to the year.
The war in Ukraine and the surge in energy means growth will have slowed to 0.5% in February (after January’s 0.8% rise), and to 0.3% in March.
Rory Macqueen, principal economist at NIESR, explains:
January’s strong GDP reading confirms that Omicron had a far smaller economic impact than previous waves of Covid-19. The wholesale and retail sector recovered strongly, regaining most of the ground lost in December.
Manufacturing and construction both recorded their third straight month of growth after the supply chain constraints of the summer. With inflation likely to bite more as the first half of 2022 progresses, January’s growth could be the fastest we see for some time.”
⚠️OUT NOW: Our latest #NIESRGDP Tracker suggests that January’s growth could be the fastest we see for some time, with the war in #Ukraine and expected long-term elevation of #energyprices & #inflation likely to affect the economy in the coming months⚡️👇https://t.co/jsPc1BGsxv pic.twitter.com/LnDSKVEdKu
— National Institute of Economic and Social Research (@NIESRorg) March 11, 2022
Pearson shares jump as Apollo considers bid
Private equity group Apollo is considering a takeover bid for global education company Pearson.
Apollo says is is in the “preliminary stages of evaluating a cash offer”. The news has pushed Pearson’s shares up as much as 24%.
Pearson’s textbook arm has suffered from the move towards second-hand sales of expensive academic publications, while the pandemic accelerated the shift to digital learning and disrupted exam testing.
CEO Andy Bird has been rejigging Pearson divisions, with a focus on selling to individuals, as opposed to colleges and institutions, via a “direct to consumer” model.
It is also focusing more on companies, helping to retrain workers after the pandemic.
Pearson, which was worth around £5bn before today’s share move, is now the top FTSE riser, currently up 19% or 127p at 777p.
Apollo examining a cash offer for Pearson, shares up 24% https://t.co/HnAb63ANHq pic.twitter.com/P5JmweS0MR
— Reuters Business (@ReutersBiz) March 11, 2022
Updated
UK and EU regulators investigate Google and Meta over online ads
![A 3D printed Facebook’s new rebrand logo Meta is seen in front of displayed Google logo in this illustration taken on November 2, 2021. REUTERS/Dado Ruvic/Illustration](https://media.guim.co.uk/8afe2c6c7d1809e3a8c18d9eb83aa99df072c939/0_214_3500_2100/1000.jpg)
Regulators in the UK and Europe have launched parallel probes into whether Google and Facebook parent Meta broke competition rules through an online advertising deal.
The UK’s Competition and Markets Authority and the European Commission are both concerned that the two tech giants colluded in the online display advertising services market, hurting competition.
The investigation centres on a pact between the two tech giants known as “Jedi Blue”. It is already the subject of an antitrust complaint filed by Texas and 15 other states against Google, which claims the deal carved up part of the lucrative online advertising market.
Andrea Coscelli, CMA chief executive, said:
We’re concerned that Google may have teamed up with Meta to put obstacles in the way of competitors who provide important online display advertising services to publishers.
If one company has a stranglehold over a certain area, it can make it hard for start-ups and smaller businesses to break into the market – and may ultimately reduce customer choice.
🔎 We’re investigating #Google and #Meta’s ad-tech agreement to see if they have broken competition law.
— Competition & Markets Authority (@CMAgovUK) March 11, 2022
We’re concerned it may restrict competition in markets for online display #advertising services.
Read more: https://t.co/v8iAV2mjUb pic.twitter.com/GnJ6gs1QiF
The CMA will examine whether the two companies restricted or prevented the uptake of ‘header bidding services’ -- a system where companies selling ad space, such as news publishers, can offer it to multiple buyers at the same time.
Header bidding is a threat to Google’s ‘Open Bidding’ platform, which runs realtime auctions for advertising space on web sites or mobile apps, between publishers and marketers.
The Texas complaint claimed that Google gave Facebook preferential access to its online advertising service, through the Jedi Blue deal, in return for Facebook supporting Open Bidding rather than header bidding.
The EC is concerned that Jedi Blue is part of an attempt to exclude ad tech services competing with Google’s Open Bidding programme. That would restrict competition for online display advertising, hurting publishers and ultimately consumers.
Executive vice-president Margrethe Vestager, explains:
Many publishers rely on online display advertising to fund online content for consumers.
Via the so-called “Jedi Blue” agreement between Google and Meta, a competing technology to Google’s Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps. If confirmed by our investigation, this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers.”
The FTSE 250 index of medium-sized companies is on track for its best week in a year, after its worst week in two years.
The more domestically-focused FTSE 250 is up 1% today, as the UK’s stronger-than-expected recovery in January lifts the mood. The index has now rallied almost 4% this week.
However, the previous week it slumped over 7% as the invasion of Ukraine rocked global markets, in the worst selloff since the pandemic hit in 2020.
Russ Mould, investment director at AJ Bell, says:
“After a mid-week rally for stocks, Thursday’s session saw a bucket of cold water poured over markets in Europe, Asia and the US,” says
“The war rumbled on, new inflation figures gave a stark reminder how the cost of living is going up fast, and the European Central Bank implied that eurozone interest rates could go up sooner than previously expected.
“The trading week is currently set to end on a more positive note with decent gains across parts of Europe including a 0.7% rise in the FTSE 100. However, Asia’s performance was mixed, and pre-market indicative prices suggest a muted day for US stocks.
UK farmers warn soaring gas costs could cut food production
The National Farmers’ Union has warned of a huge drop in UK-grown crops, including peppers, cucumbers and aubergines, as it becomes too expensive to produce them.
The NFU said producers of crops who use glasshouses are looking at a drop of up to 50% in the amount they can afford to grow because of the crippling increase in the cost of the gas they use for heating.
“The impact is being felt most in the protected crop sectors, that’s aubergines, peppers, cucumbers,” said Minette Batters, the president of the NFU, speaking on BBC Radio 4’s Today programme.
“We are already seeing massive contraction, these costs are making it impossible to grow. The only thing is to keep these glasshouses empty.”
She said producers are saying the number of cucumbers that will be grown annually could fall from 80m to 35m, while pepper production could halve from 100m. She also added that inflation was leading to dramatic rises in other areas, citing the example of the cost of raising a chicken increasing by 50% in a year for farmers.
She said the NFU had asked the government to treat the situation as a “matter of urgency”, potentially intervening and prioritising gas demand.
“We have really got to look at the gas requirements for the whole industry and where to look to intervene otherwise we are going to see less British production.”
The UK wholesale gas price for delivery next month is around 276p per therm this morning.
That’s six times higher than a year ago (although down 7% today).
European stock markets have opened slightly higher, after dropping yesterday amid fears over rising inflation, slowing growth, and the Ukraine war.
In London, the FTSE 100 index is up 58 points, or 0.8%, at 7,157 points.
Travel and hospitality companies are rising, along with miners and oil producers.
Online grocery group Ocado has risen 4.7%, after reporting that the US International Trade Commission had ruled in its favour in a patent dispute with rival Autostore.
Germany’s DAX is up 0.5%, while France’s CAC is flat, after both lost almost 3% on Thursday.
Surging energy and commodity prices mean January’s pick-up in growth may be temporary, warns George Lagarias, chief economist at Mazars:
The recovery was broad-based and encompassed both services and manufacturing. However, a closer look at the numbers suggests that the January rise in GDP might be temporary, as a large part was driven by a rebound in wholesale trading, which had previously collapsed due to the rapid spread of the Omicron variant.
The number tells us that the economy was rebounding better than expected before February. However, spiking energy and raw materials prices in February and March may significantly alter the growth calculus.
Evraz directors resign after Abramovich sanctioned
Almost the entire board of Russian steelmaker Evraz have quit, a day after the UK imposed sanctions on Roman Abramovich, its largest shareholder.
All 10 of Evraz’s non-executive directors have resigned with immediate effect, the company says.
The list includes Sir Michael Peat, a former private secretary to Prince Charles, former former Ford executive Stephen Odell, oligarch Eugene Shvidler, Chelsea FC director Eugene Tenenbaum, and Evraz chairman Alexander Abramov.
The mass departure leaves Alexey Ivanov, the company’s chief executive, as the sole director of Evraz, whose shares were suspended in London yesterday.
Evraz says:
EVRAZ is deeply concerned and saddened by the Ukraine-Russia conflict and hopes that a peaceful resolution will be found soon.
In light of the Financial Sanctions Notice issued by the Office of Financial Sanctions Implementation, HM Treasury, on 10 March 2022 and the suspension of the Company’s shares from trading, all the EVRAZ plc non-executive directors - Alexander Abramov, Alexander Frolov, Alexander Izosimov, Deborah Gudgeon, Eugene Shvidler, Eugene Tenenbaum, Karl Gruber, Maria Gordon, Sir Michael Peat and Stephen Odell - have resigned as directors with immediate effect. Alexey Ivanov, the Company’s CEO, will continue as a director.
On Thursday, the UK said Abramovich had destabilised Ukraine through his “effective control” of Evraz which, it said, may have supplied steel to the Russian military which may have been used to produce tanks. Abramovich owns a near-29% stake.
Yesterday, Evraz denied its steel was used to build Russian tanks, saying it provided steel only to the “infrastructure and construction sectors”.
The company also denied:
“that it is or has been involved in providing financial services, or making available funds, economic resources, goods or technology that could contribute to destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine – which includes potentially supplying steel to the Russian military which may have been used in the production of tanks.”
Updated
Sunak: Russia’s invasion of Ukraine creating significant economic uncertainty
Chancellor of the Exchequer, Rishi Sunak, has responded to today’s GDP report:
“We have provided unprecedented support throughout the pandemic, which has put our economy in a strong position to deal with current cost of living challenges. We are continuing to help people where we can, including through over £20bn of support this financial year and next.
“We know that Russia’s invasion of Ukraine is creating significant economic uncertainty and we will continue to monitor its impact on the UK, but it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails.
Sunak is under pressure to provide more support for UK households facing the worst cost of living squeeze in decades, in his Spring Statement later this month.
Last month’s package of a £200 energy bill rebate (repaid over five years) and a £150 council tax rebate for some households is insufficient to cushion the blow significantly, economists have warned.
My colleague Heather Stewart reports, though, that the Treasury is resisting calls to beef up the energy bill package, but is considering some other options:
Rishi Sunak will take some limited action to tackle the cost of living crisis in this month’s spring statement but will reject calls to beef up his much-criticised energy bill reduction scheme, government sources say.
Yael Selfin, chief economist at KPMG UK, warns that the conflict in Ukraine will hit the recovery.
Higher and more volatile commodity prices and shortages of key raw materials will hit the production sector, and drive inflation higher, Selfin says.
“Further headwinds for the UK economy are likely to arise from the elevated levels of uncertainty, tighter financial conditions, and disruptions to trade, potentially reducing GDP growth to 3.3% this year and to 0.8% next year.
“The new sanctions and the uncertainty around the supply of some key commodities will be felt particularly in Europe, where some of the strongest trade links with Russia remain. Prior to the escalation, companies in the UK were reporting some easing in supply chain constraints, although they were still rising in the Eurozone. The latest developments are likely to reverse some of these gains.”
January’s rebound may be “as good as it gets” for the UK economy this year, warns Paul Dales of Capital Economics.
The cost of living crisis and the influence of the war in Ukraine, will weigh on growth through this year, he explains:
Given that Omicron cases were still very high in the first half of January, some of the rebound in activity may have flowed into February too (although storm Eunice may have been a drag). But the hit to households’ real disposable incomes due to surging energy prices, partly due to the war in Ukraine, and higher taxes will start to be felt from March and April.
As such, GDP growth will probably slow throughout the year
But the Bank of England is still expected to raise interest rates again next Thursday, with “high inflation filtering into higher price/wage expectations”, Dales adds.
The UK’s service sector is now 1.3% above its pre-coronavirus pandemic level, while construction is 1.4% higher.
Production, though, is 2% lower.
![UK GDP January 2022](https://media.guim.co.uk/6a3512db110cfd9444d3de636e268a6039d0f61f/0_0_621_451/500.jpg)
![UK GDP](https://media.guim.co.uk/1977dad9807f3a7c82ba6ff391d2a4b14c38249e/0_0_639_482/500.jpg)
ONS: GDP bounced back from Omicron wage
ONS director of economic statistics Darren Morgan said:
“All sectors grew in January with some industries that were hit particularly hard in December now performing well, including wholesaling, retailing, restaurants and takeaways. Computer programming and film and television production also had a good start to the year.
“While supply chain issues persisted in certain sectors, output in both construction and manufacturing grew for the third month running.”
Darren Morgan continued: (2/3)
— Office for National Statistics (ONS) (@ONS) March 11, 2022
⬇️️ pic.twitter.com/m8qqsHQ0bH
Darren Morgan also said: (3/3)
— Office for National Statistics (ONS) (@ONS) March 11, 2022
⬇️ pic.twitter.com/yEdmCFRdAG
Introduction: UK economy rebounds strongly in January
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The UK economy has returned to growth as the economic damage caused by the Omicron variant faded.
UK GDP grew by 0.8% in January, faster than economists expected, after contracting 0.2% in December when ‘Plan B’ restrictions were introduced after the fast-spreading Covid-19 variant emerged.
New figures from the Office for National Statistics show that every sector grew in January, with services up 0.8%, production up 0.7% and construction up by 1.1%.
Customer-facing services companies saw a strong pick-up. The food and drink sector grew 6.8% in January, after the festive season was badly disrupted as parties were cancelled and more people worked from home in December.
GDP grew 0.8% in January and is now 0.8% above its pre-pandemic peak.
— Office for National Statistics (ONS) (@ONS) March 11, 2022
Services grew 0.8% (1.3% above), manufacturing grew 0.8% (1.6% below) and construction grew 1.1% (1.4% above) https://t.co/ldkxuCew1o pic.twitter.com/alaO7y8lEn
January’s rebound means the UK economy was 0.8% above its pre-pandemic levels:
![UK GDP to January 2022](https://media.guim.co.uk/ecf06963c2ac62e212192337d576d9f95a420e03/0_0_642_481/500.jpg)
However, Russia’s invasion of Ukraine is now threatening the recovery, with the International Monetary Fund likely to cut its global growth forecasts.
Managing director Kristalina Georgieva told reporters last night that the unprecedented sanctions imposed on Russia are pushing the Russian economy into a deep recession.
The crisis is also causing spillovers globally: driving up commodity prices, leading to higher inflation which hits real incomes, and damaging financial conditions and business confidence.
Georgieva said:
So to sum it up, we have tragic impact of the war on Ukraine. We have contraction on a significant basis in Russia. And we see the likely impact on our World Economic Outlook. We will come up with, next month, a downward revision of our growth projections.
So we got through a crisis like no other with the pandemic. And we are now in an even more shocking territory. The unthinkable happened—we have a war in Europe.
In January, the IMF forecast the world economy would grow by 4.4% this year, down from 5.9% in 2021.
US president Joe Biden is expected will ratchet up the economic pressure on Vladimir Putin later today by calling for the end of normal trade relations with Russia, according to reports.
The move, reported by Reuters and Bloomberg citing anonymous Biden administration sources, would clear the way for increased tariffs on Russian imports and comes on top of widespread sanctions and the decision this week to ban oil imports from Russia by the US and UK.
The agenda
- 7am GMT: UK GDP and trade report for January
- Noon GMT: Brazil’s inflation rate for February
- 3pm GMT: University of Michigan survey of US consumer sentiment for March
Updated