Support for economic sanctions on Russia dwindles amidst impact on home soil
It has been almost eight months since Russia’s illegal invasion of Ukraine. Since then, there has been a worldwide hike in energy prices, leading to the Versailles Declaration by which EU leaders and 27 member states agreed to phase out dependence on Russian fossil fuels. The war in Ukraine is also having a direct impact on global food security and affordability due to disruptions to the exports of various commodities.
In March, 37% of businesses agreed that the economic sanctions placed on Russia were having a negative impact on their business. This has since risen significantly...
Attitudes shift amid domestic ramifications
It appears that in the light of rising energy and business costs, and the wider cost-of-living crisis, business decision-makers are growing impatient as initial support for the sanctions is starting to shrink.
Whilst many UK businesses still support the Government’s sanctions placed on Russia, support has been steadily declining, having already dropped by 6% points since June 2022. Likely influenced by the record increases in inflation, linked by both the Government and the Bank of England to the war in Ukraine.
Decision-maker’s views on the impact of the war also changed during this period. In March, 37% of businesses agreed that the economic sanctions placed on Russia were having a negative impact on their business. This has risen significantly, with nearly half of businesses (46%) agreeing in September.
This agreement is higher amongst medium and large businesses (54%), compared to small businesses (43%). In addition, businesses who operate internationally are more likely to agree that they have been negatively impacted by the economic sanctions than those who operate locally/regionally (respectively 55% vs 41%), with one in five who operate internationally (20%) agreeing strongly.
Ongoing hesitance toward energy alternatives
Despite this, support for the UK becoming more energy independent has not increased. Only one in ten (11%) businesses say that their business spending has remained unaffected by increased costs and inflation.
Despite the energy crisis stemming from the widespread dependence on Russia’s fossil fuels and gas, and Putin’s suggested weaponisation of these utilities, UK businesses are not calling for energy independence. In fact, the support for investment in renewable energy has dropped from 81% in March 2022 to 76% in September.
When it comes to whether businesses are still refusing to operate in Russia, the proportion who have now started or resumed business and investments in Russia (29%) notably outweighs the proportion who withdrew from working with Russian companies (12%). Notably, medium and large businesses were more likely to have shifted to working or resuming business with their Russian counterparts. Perhaps reflecting the nature of their businesses and a more likely international remit.
Whilst it is regrettable to see the decline in support from UK businesses, it is also understandable. Many are currently experiencing anxiety over their own capability (or even inability) to pay the bills or stay in business and are consequently withdrawing their support.
However, instead of reverting to dependence on Russian energy and turning a blind eye to the events unfolding in Ukraine, UK businesses should consider new avenues for growth and betterment.