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McDonald’s, Coca-Cola, PepsiCo, Starbucks, Unilever: The list of mainstream brands leaving Russia has accelerated in recent days, joining what a Yale professor called a ‘trade blockade’ by Russian President Vladimir’s regime Putin.
The departure of names such as McDonald’s and Levis is loaded with historical significance. The sight of crowds queuing for Big Macs in Moscow was seen as a marker of the end of the Soviet Union, while Levi’s 501 jeans had become a symbol of dissent behind the Iron Curtain.
There were some notable exceptions, such as Danone boss Antoine de Saint-Affrique, who defended his decision to stay in Russia, arguing that he had a “responsibility to the people we feed, the farmers who supply us milk, and the tens of thousands of people who depend on us.
It’s not just mainstream brands. Shell said yesterday it would pull out completely and stop any further purchases of Russian oil. French company Total is under pressure to follow suit.
Russian companies are starting to feel the heat, especially in financial services. The international ambitions of state-backed institutions VTB and Sberbank have been hampered by sanctions, but at home – where the two lenders account for almost half of the banking market – they are hit even harder. JPMorgan Chase has joined MSCI, S&P Dow Jones and FTSE Russell in removing Russian debt from their bond indexes.
On the other side of the economic war, European companies – especially those in energy-intensive sectors such as metals – are preparing for a severe fallout.
For automakers, which already face high input costs and supply chain issues, rising energy bills — their highest costs after labor and materials raw materials – is another blow to their competitiveness.
Airlines, the most oil-consuming sector of all, now faces a second serious crisis in less than two years as the price of fuel rockets and flight cards must be redrawn. “We faced the plague, only to be visited by a war,” said Ryanair boss Michael O’Leary.
Fertilizer and chemical companies are also hard hit. Norway’s Yara warned of a food crisis. Russia is a key source of fertilizer materials that power global agriculture. Petrochemical companies are also likely to suffer from soaring prices for naphtha, which is made from crude oil and used to create resins and plastics. Almost half of European naphtha imports come from Russia.
European banks with large exposure to Russia, such as Italy’s UniCredit, France’s Societe Generale and Austria’s Raiffeisen Bank, are also expected to be affected. UniCredit said an “extreme scenario” in which all of its Russian business was wiped out would leave it with losses of 7 billion euros.
But back to this corporate exodus. Despite the big-name McFlurry heading for the exit, many more have yet to take a stand, our Moral Money newsletter reports.
Either way, argues trade writer Alan Beattie, many of those who leave are motivated more by the threat of sanctions damage than their virtue suggests. He points out that many are happy to do business with other autocracies that do some pretty dastardly things.
“Jumping out of Russia before being pushed is a personal interest: it’s not an act of principle,” he said.
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Need to know: the economy
The American and British decision to ban Russian oil imports has opened a new front in the economic war against Vladimir Putin – here’s our explanation of what that means for global energy markets. Our great read examines whether coal could be the big winner as Europe scrambles to find alternatives. Calls are also growing for more fracking. Meanwhile, UK consumers are urged to reduce their energy consumption by turning down the heating and driving more slowly.
The threat to the economic recovery is the uncomfortable backdrop to tomorrow’s political meeting of the European Central Bank. However, European stocks were boosted by hopes that further stimulus from the EU could be on the way. The gravity of the situation was underscored by economics writer Chris Giles, who compares Russia’s oil shock to those of the 1970s and examines its potential to lead to stagflation – the toxic combination of slow growth and high inflation.
Latest UK and Europe
Ahead of her March 23 spring statement and as the economic fallout from Ukraine begins to deepen the cost of living crisis, the British Chancellor Rishi Sunak is under increasing pressure to cut taxes. consumer spending strengthened in February with the reopening of offices and the resumption of social life, according to the payment company Barclaycard, supported by similar findings from the British Retail Consortium. However, the cost of living moves up the list of consumer concerns.
British MPs have accelerated a new economic crimes bill, but Foreign Secretary Liz Truss admitted the country had been “slower” than the EU and US in imposing sanctions on Russian oligarchs. UK taxpayers could be owed £50m in loan guarantees to several of them.
Decades of work by China Globalizing its currency by increasing its use in international finance is bearing fruit as investors turn to new safe-haven assets amid the current turmoil. The renminbi, the currency of Russia’s closest strategic ally and main trading partner, has remained remarkably stable throughout the crisis. Still, the Lex column is skeptical of Beijing’s ability to provide financial infrastructure like card payments to help Moscow circumvent sanctions.
Need to know: business
The Global nickel The market, which was already booming due to the conflict in Ukraine, came to a halt today after soaring prices prompted China’s main commodities exchange to freeze trading in some of its most heavily traded contracts. assets. Russia is the world’s third largest supplier of nickel with 13% of global capacity.
Cathay PacificHong Kong’s chief executive said the airline plans to burn up to HK$1.5 billion ($192 million) a month due to Hong Kong’s tough pandemic restrictions, as it reported a net loss of HK$5.5 billion for 2021. Meanwhile, local residents are stuck in limbo waiting for authorities to act as Covid cases soarreports Ravi Mattu, associate news editor for Asia, from our office in the city.
Losses at UK furniture retailer Made.com more than doubled to £31.4m as supply chain pressures and rising shipping costs started to take their toll. The furniture sector has been particularly hard hit by freight pressures, as many of its large bulky items, or their raw materials, come from China and elsewhere in Asia.
The world of work
The experience of confinement and working from home has prompted many people to change jobs, but what are the pitfalls? Work and careers columnist Lucy Kellaway has four big lessons for making the most of a career change.
working women, who already have the lion’s share of domestic burdens, have been disproportionately affected by the coronavirus crisis, usually taking on additional childcare and teaching responsibilities as schools were closed – all at the detriment to their career. “As the world emerges from the pandemic, now is the time to ensure that the cost of care appears elsewhere than in women’s wealth,” says the FT editorial board.
“The pandemic has hit the female talent pool hard,” writes Eleanor Mills, founder of a platform for middle aged women. Companies need to do more to support women through ‘pinch points’, such as divorce, added family responsibilities and the experience of menopause, if they are to reap the benefits of their hard-earned wisdom, she argues. .
Menopause is also the subject of the latest Working It podcast. Isabel Berwick and her guests discuss pioneering politics on Channel 4, as well as the downsides of women being open about their health.
Read our Women in Business special report to learn more about how women’s working lives have been altered by the pandemic.
Covid cases and vaccinations
Total number of global cases: 441.8mn
Total doses administered: 10.9 billion
Get the latest global picture with our vaccine tracker
And finally . . .
Has all that doomscrolling on your phone got you swaying? Find out how European tech correspondent Madhumita Murgia pulled off her digital diet attempt.
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