Ukraine & your finances: how are you affected?

Ukraine & your finances: how are you affected?

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult an independent financial adviser.

Many of us are watching the situation in Ukraine with grave concern. Daily reports tell of new loss of life – including civilians – as Russian forces push further into the country. Huge refugee flows are rushing into neighbouring countries such as Poland. We all hope for a swift, peaceful conclusion to the conflict for the people directly affected by these tragic events.

These events in Eastern Europe also have an impact on our daily lives here in the UK – perhaps in ways that are not immediately clear. Below, our team at Cedar House explains how your wealth and finances could be affected in the coming days, weeks and months by the Ukraine conflict – together with some ideas about what to do about this. 

We hope you find this content useful. If you want to discuss your own financial plan with us, please contact our team for more information or to access personalised financial advice:

020 8366 4400 or enquiries@cedarhfs.co.uk


Gas & electricity

Many people are unaware that Russia supplies a huge amount of oil and gas to Europe. The EU, for instance, gets 40% of its gas from Russia, with some of the most dependent member states including Germany (49%) and Italy (46%). The UK is far more insulated, with only 4% of total gas supply emanating from Russia in 2021. Naturally, therefore, any western economic sanctions on Russia (to punish it over Ukraine) are likely to push up gas prices as importing countries struggle to meet national demand from elsewhere.

The fact is, Russia is their world’s 3rd largest oil producer and so has a huge impact on global energy prices. Whilst we cannot be certain about what lies ahead in 2022, the Ukraine conflict will, therefore, likely push up your energy bill in the months ahead. Bear in mind that the UK’s energy regulator (Ofgem) already raised the energy cap on 1st October 2021 – increasing the standard tariff by £139 to £1,277 per year. From April 2022, moreover, Ofgem has announced that annual prices will go up to £1,971 for about 18m households (a 54% rise).

Unfortunately, you do not have much control over energy prices. However, you could make your home more energy-efficient. Whilst there is less threat of a gas shortage due to the UK’s limited Russian gas supply, taking this step could help you protect your finances from price global movements in energy.


Food & petrol

The UK is already facing an inflation rise and is expected by the Bank of England (BoE) to rise to 7.25% in April 2022. The cost of living is now the highest in 30 years, yet events in Ukraine – known as Europe’s “bread basket” – could push things even higher. Ukraine has fast fields of wheat and other products, and during the Soviet Union years it supplied 25% of the state’s food output. An invasion and prolonged occupation could lead to disruption in production and supply chains, which could ultimately affect supermarket shelves – and, therefore, your shopping bill.

There are hints of this already in the global commodity markets. The prices of wheat and corn have both gone up in late February and markets prepare for a possible supply shock. Ukraine suspended its ports as Russian forces attacked from the Black Sea, and since then commercial vessels have been restricted in their movements (effectively stopping Ukrainian maritime trade). 

This could have a particularly negative impact if ports are still strangled by the time harvest time comes in the spring and summer months. Moreover, Russia – also a big supplier of agricultural products – may be restricted from stepping in to meet global demand as western sanctions limit its exposure to international customers.

Here, again, global events are outside of your control. However, you can help protect your finances by having a strong emergency buffer (3-6 months of living costs), ensuring a healthy gap between your monthly income and expenses and by having a diverse weekly food shop.


Cyber attack

The UK, US and EU member states banned specific Russian banks from Swift in late February in response to mounting international pressure. This is widely seen as a big step, as Swift is one of the world’s leading financial systems to conduct global trade and finance. However, now that Russia has less “skin in the game” with Swift, there is concern that Kremlin-backed cyber attacks on the system will become more common. 

Swift is not a bank, but a messaging service which tells you, for instance, when a payment has been sent or received. It is jointly-owned by over 2,000 global banks and financial institutions, which helps prevent any single country or bank holding a monopoly on Swift. However, this vast infrastructure may leave it more vulnerable to a sophisticated, coordinated cyber attack. Russia may also not be more inclined to directly target western national infrastructure – like during the 2014 global WannaCry cyber hack (attack on GP data centres), but on a larger scale. 

Here, this is a reminder to ensure you are extra cautious to follow good safety and security precautions when browsing the internet – especially when online banking, or sending sensitive financial information. Consider investing in a good VPN (virtual private network) for an extra secure connection – especially on public networks, for instance.



Interested in discussing your financial plan with an experienced financial adviser? Get in touch today to discuss your financial plan with a member of our team here at Cedar House via a free, no-commitment consultation:

020 8366 4400 or enquiries@cedarhfs.co.uk


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