Boris Johnson has announced sanctions against five Russian banks and three billionaires linked to Vladimir Putin after Russia ordered troops into rebel-held regions Donetsk and Luhansk yesterday (21 February).

The British prime minister told parliament that the measures amounted to a “first barrage” of sanctions which could be added to if the situation developed further.

Since Johnson’s speech, Putin has received approval from Russian legislators to deploy armed forces abroad.

Sanctions

The PM named Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank, as those the UK is targeting, reports the BBC.

Billionaires Gennady Timchenko, Boris Rotenberg, and Igor Rotenberg are also at the receiving end of fresh UK sanctions.

“Any assets they hold in the UK will be frozen, the individuals concerned will be banned from travelling here, and we will prohibit all UK individuals and entities from having any dealings with them,” he said.

Earlier this month the UK also introduced beefed-up legislation to allow ministers powers to target companies and/or individuals “carrying on business of economic significance to the government of Russia”.

‘Tougher action’ needed

Labour leader Keir Starmer welcomed the sanctions but also said tougher action was needed as “a threshold has already been breached”, the Guardian reports.

“If we do not respond with a full set of sanctions now, Putin will once again take away the message that the benefits of aggression outweigh the costs,” he added.

Trade war

The UK should be prepared for Russian sanctions in return, according to iNews, which reports that Russia issued a tit-for-tat response to Western sanctions following the invasion of Crimea in 2014.

While Russia is not a major market for most British firms, a broader sanctions regime would affect UK companies which do business in the country such as BP, which has a significant stake in the state-run energy firm Rosneft.

City hit

According to the Telegraph, thwarting the ability of Russian companies to raise capital on London’s markets would represent an escalation in the UK’s response.

A crackdown on Russian firms and wealthy individuals in the UK would also take business away from British banks and associated City services, such as asset managers, accountants and law firms.

Trade with Russia

There are currently 31 Russian companies listed on the London Stock Exchange, with a combined market value of £468bn, according to S&P Global. 

According to latest government figures, Russia is the UK’s 19th largest trading partner with trade worth £15.9bn in the year to the end of Q3 2021.

The top exports to Russia were cars, pharmaceuticals, specialised machinery, power generators, and general machinery. The main imports were oil and gas, and metals.

Food security impact

There are also concerns that food security in the UK could be affected by an invasion of Ukraine by Russia.

Analysts at Rabobank warned that an invasion could cause wheat prices to double, putting more pressure on UK food prices as they soar at their fastest pace in almost a decade, according to the Telegraph.