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UK and Ukranian flags flying in breeze

UK economic support for Ukraine is set to be rewarded with a string of lucrative construction contracts.

iNews reported on Monday (28 August) that President Zelenskyy is placing UK firms at the ‘top of the list’ for when Ukraine’s post-war reconstruction efforts begin.

This follows Ukrainian prime minister Denys Shmyhal approaching the UK government to initiate bilateral trade agreement talks.

Supporting Ukraine

Speaking to i, Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), expressed hope that deals could be struck to maximise the Ukrainian recovery effort. He said:

“Construction could be a key focus, both in terms of materials such as specialised machinery – which is already our top export – and services, with skilled workers going out to Ukraine and supporting construction works.

“Financial services is another key area we could expect to be prioritised, with funding and access to capital crucial for reconstruction.

“A deal that facilitates trade could potentially create new opportunities for UK businesses, and for Ukraine a trade deal could be vital in re-building the country post-war.”

Costly rebuild

The World Bank completed an assessment of Ukraine’s post-war construction needs, estimating costs would reach $411bn, with the majority needed for transport (22%), housing (17%) and energy infrastructure (11%).

This assessment only covered the first year of Russia’s invasion, making the true value potentially much higher.

UK assistance

Since the start of Russia’s invasion in February 2022, the UK has led support around reconstruction.

In June 2023, London hosted the second annual Ukraine Recovery Conference, gathering business leaders and humanitarian representatives to discuss the future rebuild.

The summit also sparked trade talks, culminating in the UK-Ukraine Digital Trade Agreement in March 2023, committing the UK to support Ukraine with trade and investment. Benefits to Ukraine include access to the UK’s advanced payment and transaction services, e-signatures and e-contracts, supporting post-war commerce and economic growth.

The deal also continued the suspension of tariffs on Ukrainian imports until March 2024.

Transport commitment

In addition, the Department for Transport’s (DfT) is already committed to rebuilding Ukraine’s transport infrastructure.

Last August, former transport secretary Grant Shapps, signed a pact pledging resources and expertise towards restoring bridges, roads and rail networks.

EU disunity

Attempts to pass a further round of EU financial support have stalled amid debate about contributions.

While the desire to support Ukraine hasn’t waned, against a backdrop of monetary tightening and worsening mid-term economic outlooks several states have questioned their ability to send further funds.

The FT reports that Germany and the Netherlands have been most vocal in questioning contributions, following requests from Brussels to add a further €66bn to the EU 2021-2027 budget. This follows growing concern about Germany’s economic health after a manufacturing slump led to a third quarter of stagnating or falling growth.

From the supplementary funds, €17bn had been earmarked for financial grants to Kyiv.

Private funds

Elsewhere, private financial institutions are seeking to contribute towards reconstruction efforts.

Blackrock and JP Morgan have set up a Ukrainian reconstruction bank, targeting billions of dollars in investment towards infrastructure, climate provision and agricultural projects.

The bank is taking what’s known as a ‘blended finance’ approach, attracting states, private donors and international financial institutions.