Yahoo Finance Russia sanctions to hit UK poorest the hardest, MPs warn
Sanctions against Russia will come at a cost to the UK, with the poorest households to be hit hardest by higher energy costs.
A report by the Treasury select committee said that Russia “is heading towards economic catastrophe”, but that its invasion of Ukraine will have a significant economic impact on the cost of living in the UK.
“There will be a cost to the UK economy of the economic sanctions imposed on Russia. It is not possible yet to quantify that cost. But we believe that, on the information currently available, it is most definitely a cost worth bearing in order to aid Ukraine in opposing Russian aggression," the report said.
Read more: Russian energy sanctions could push UK inflation to 7.5%
“However, that cost, combined with the already present pressures in the UK on the cost of living, will impact the whole country, and will be felt particularly by low income households”, MPs said in a report.
The committee is calling on the government to provide additional financial assistance for those on the lowest incomes as the economic sanctions on Russia will lead to higher prices, with knock-on effects for households and businesses.
“As the government moves forward with its sanctions strategy, it must take further action to support UK households, in particular those on lower incomes, to manage the subsequent rise in energy and other cost,” the cross-party group of MPs said.
The UK government has recently announced sanctions against a further 370 Russian and Belarusian individuals and entities.
The Foreign Office said the additions to the government's sanctions list include Russian president Vladimir Putin's "key political allies, regime spokespeople and Kremlin-backed disinformation agencies".
It also hiked tariffs on imports from vodka to steel, and banned exports of luxury goods.
It had previously severed ties with Russian banks, grounded planes and stopped ships from using its ports, and announced plans to phase out Russian oil imports by the year-end.
Mel Stride, chairman of the Treasury committee, said: “This war will also have economic consequences here at home, and while these are worth bearing to support Ukraine in their fight for freedom, it’s becoming increasingly clear that the government will need to support those who are hit hardest by price rises.
“Recent reports show that the public finances are in a stronger position than anticipated, and the chancellor should use this additional fiscal firepower to bring forward support for those on the lowest incomes.”
Read more: Can Rishi Sunak rescue the UK from a cost of living crisis?
Over the weekend, chancellor Rishi Sunak said that “of course” he will help households dealing with further increases in energy bills as a result of the Russia-Ukraine war.
The chancellor said that he will “stand by” people facing the cost of living squeeze in “the same way I have done in the last couple of years”.
Gas and electricity bills will increase by a record-breaking 54% in April. The average household will see bills increase from £1,277 to £1,971.
With wholesale rates at record levels following structural shifts in the market due to the pandemic, as well as the impact of the Ukraine war, that could rise to £2500 in October, according to personal finance expert Martin Lewis.
