Russia’s recent invasion of Ukraine has triggered a sharp rise in costs, particularly in oil and gas prices, while prompting renewed supply chain disruptions. Following a decline in the number of delivery delays in February, to the lowest since November 2020, the Ukraine crisis is expected to drag down industrial production across Europe over the coming months. “As the Russia-Ukraine conflict unfolds, UK manufacturers should brace for some additional headwinds,” Mike Thornton, the head of manufacturing at the audit, tax and consultancy firm RSM, said, adding that the surge in energy prices is “the most obvious for heavy industry”.
Russia is the world’s largest natural gas exporter and is among the top suppliers of crude oil and several commodities and metals, including wheat, platinum, gold and palladium. According to Thornton, recent shortages in microchips and other components may continue and expand into other areas, as a result of sanctions and export restrictions imposed against Moscow.
According to Make UK, about 3,800 British firms export goods to the transcontinental nation, while 1,200 imported materials, despite only accounting for 0.8 per cent of total exports and 2.1 per cent of imports to the UK. “Any trade disruptions will be financially unwelcome at a time when many firms are recovering from the impact of the COVID-19 pandemic and the reductions in international trade that followed the UK’s exit from the EU,” the manufacturing trade body said.
