Standing up to Russia and providing support to Ukraine will not be “free” for the UK economy, Rishi Sunak warned.
The chancellor released his spring statement Wednesday on the issue of security, as he said a strong economy at home meant being able to fight off threats, such as Vladimir Putin, abroad.
Sunak told the House of Commons that the sanctions imposed on Russia were “on an unprecedented scale and scope” and that the UK had a “moral responsibility” to help Ukraine.
But he said the measures taken against the Russian president and his regime were “not gratuitous for us at home” and presented a “risk” to the recovery.
Sunak told MPs: “The pain we feel for (Ukraine’s) suffering and admiration for their bravery is matched only by the gratitude we feel for the security in which we live. And what underpins that security is the strength of our economy.”
He said: “We must have no doubt, behind Putin’s invasion there is a dangerous calculation: that democracies are divided, politically weak and economically insecure, unable to make difficult long-term decisions to strengthen our economies.
“This calculation is wrong.”
But he said it was too early to tell what impact the invasion, and subsequent Western support, would have on the economy.
He said the Office for Budget Responsibility (OBR) had acknowledged there was “unusually high uncertainty around the outlook”.
The OBR said Wednesday that the invasion was “above all a human tragedy and a reminder of the terrible costs of wars and the immense and immeasurable losses for those caught up in them.”
But he added: “The conflict also has major repercussions for the world economy, whose recovery from the worst of the pandemic was already being hit by Omicron, supply bottlenecks and rising inflation.”
The OBR said that a fortnight after the invasion, oil and gas prices peaked more than 200% and 50% above their late-2021 levels, respectively.
“Since then, prices have receded, but remain well above historical averages,” he said.
Shadow Chancellor Rachel Reeves attacked Sunak for not increasing the Defense Ministry’s budget in light of the Ukraine invasion.
Ms Reeves said: “The situation following Putin’s criminal attack on Ukraine remains gravely serious, just one month after the invasion, many things have changed with repercussions for years to come.
“But the foreign minister has not explained today why he decided to approve a reduction in our country’s armed forces last October.”
Dr. Alan Mendoza, executive director of the Henry Jackson Society think tank, said: “Sadly, the Kremlin will welcome the fact that the Chancellor has not increased defense spending. The Government must urgently invest in our armed forces.”
He said: “The invasion of Ukraine has shown that our enemies increasingly threaten us and our security. This spring declaration should have been the time to increase defense spending and reverse dangerous cuts in our military.”
Meanwhile, in his statement to the House of Commons, Sunak said £400m was being sent to Ukraine “in economic and humanitarian aid”.
But the charity World Vision called for the aid budget to be increased.
Chief Executive Mark Shear said, “If the aid budget is not increased to meet these needs, funds will be redirected from other programs that are vital to saving lives.”
Simon Starling, director of policy, advocacy and research at international development network Bond, added: “It would be reckless and morally wrong if our support came at the expense of other marginalized communities affected by extreme poverty, conflict and inequality.
“The money we give to Ukraine, and all future crises, must be in addition to the UK’s already reduced aid budget, not taken, until the government meets its 0.7% commitment.”