The Russian crisis

What the Russian Crisis means for the economics world

Deteriorating relations between Russia and the West shows clearly the dangers to the people of the world. However, this crisis leaves a greater impact to the rest of Europe's economies. As it stands Russia supplies 30 percent of Europe's gas demand and since the start of what is thought as WW3, gas and petrol prices are expected to rise. It is predicted that petrol prices could rise up to 5p a litre whilst Brent crude oil prices rose to $112 a barrel and set a 2014 high. This means that the working class in Europe suffer a decrease in disposable income as petrol is more expensive and affects the damaged global economies have to either spend more on crude oil trade or decrease how much Brent crude oil to trade. More important is the fact the a large amount of gas for France, Britain and Germany comes from Russia. Now it isn't surprising that gas prices are predicted to rise as Russia cut off its supply of gas twice before in 2006 and 2009 over price disputes with Ukraine. The real problem with this conflict is that the possibility of Russia suffering economic sanctions from the EU is increasing. What this could lead to is Russia simply cutting off its supply of gas to Europe, thereby leaving a considerable strain on the economies of France, Britain and Germany. If gas isn't coming in from Russia then the European governments have to spend more on finding short-term solutions to the gas shortages.

The problems with this conflict is that Russia and Ukraine supply the US, Canada and Australia with grain, wheat and corn. Ukraine in particular supplies these nations from Crimea- currently occupied by pro-Soviets and Russians- meaning that global economies will also have to find short-term solutions to a lack of goods coming in from Russia and Ukraine. In addition to this, 24 percent of Ukraine's total exports comes from grain, wheat and corn which also brings in 5 percent of the country's gross domestic product. Therefore this conflict could bring a stand-off to at least a quarter of Ukraine's exports globally, hence damaging the country's economy in a potentially serious way. To make matters worse the price of wheat is increased by 28 cents to $6.30 yesterday meaning that it puts pressure on the supply of wheat and the quantity needed to trade for the world's economies.

So whether or not the Russian crisis leads to a war or not, if Russia doesn't react to the deadlines it was set to leave Ukraine then they will suffer economic sanctions and could leave homes across the UK and the rest of Europe with a lack of gas.