With the crisis unfolding in Ukraine, many of us have been glued to the news. The impact of this conflict globally is difficult to predict, as events are happing so quickly. However, there are a few key areas to think about in terms of how the situation in Ukraine could impact UK businesses.
A Sharp Rise in Costs
Russia is a lead exporter of natural gas, crude oil, and other commodities like metals and wheat. Energy prices are expected to surge (on top of the price rises coming in April), and factory costs could go up in response. Global shipping costs are expected to rise, too.
In the UK, inflation is expected to rise to 8% – this was predicted before the crisis began in Ukraine, so businesses will have to think of ways to mitigate for an increase in expenses. Many smaller businesses are having to adapt by increasing prices for customers to make up for the rise in electricity and gas prices.
It’s also worth considering the unfolding crisis and how it may impact fuel prices and availability, which could cause delays.
Finally, there may be an increase in the cost of food. Ukraine and Russia make up 29% of global wheat exports, and a whopping 80% of sunflower oil exports. This means the price of items like bread could become significantly more expensive, and there may be some supply issues.
Impact on Supply Chain
Now is a good idea to look at your supply chain from top to bottom and to consider the implications of this for your own business.
The crisis in Ukraine is already beginning to have an impact. Supply chain disruption has already begun, with firms in Europe hit with delays in industrial production. If your business relies on any kind of raw materials from Russia (at any point in the supply chain), this could be an issue.
The microchip shortage is expected to continue, so tech businesses may feel the effects of this for some time to come. As Russia is a major producer of titanium, nickel, cobalt, and lithium, this will have a big impact on other types of businesses too, including the aerospace and automotive industries.
Cyber Security
Now is a very good time to consider cyber security. According to GCHQ’s National Cyber Security Centre, businesses should be strengthening their online security as much as possible, as there is an increased risk of Russian cyber-attacks.
General Disruption
You can also expect general delays over the coming weeks. With the UK government imposing a package of sanctions against Russia, this may have an impact on existing trade flows for British companies if they have investments in Russia.
At the time of writing, there is a ban on British airlines landing at Russian airports, which may cause problems for businesses with links in Russia.
How to Help
While this is an incredibly worrying time, there are ways your business can help. You can check the Gov.uk website for more ideas.
