The UK would suffer a £70billion economic hit and plunge into recession if Europe immediately bans Russian oil and gas imports, Rishi Sunak has warned privately.
Boris Johnson has urged EU allies to follow the UK’s own planned boycott of oil – and potentially gas – exports from Moscow, to punish its invasion of Ukraine.
Corn The Independent learned that the Chancellor feared the devastating impact on Britain’s economy if the EU acted now, underscoring Europe’s collective dependence on Russia for its energy needs.
Mr Sunak told his fellow ministers at a cabinet meeting that he would “immediately” withdraw up to £75billion from the UK economy – the equivalent of around 3% of gross domestic product ( GDP), revealed a source close to the discussions.
This would in turn push the UK into recession in 2022, at a time when households are already facing the worst cost of living crisis in decades, triggered by rising inflation and soaring utility bills. fuel and power.
It shows how – despite Mr Johnson’s call for countries to end their ‘reliance’ on Russian hydrocarbons – there is some private relief in London that there is no total embargo of the EU.
There is pressure in mainland Europe for the EU to go further, which has seen more than 100 MEPs sign a letter calling on Brussels to impose a ban immediately.
Mr Sunak told the cabinet last week that the move would lead to recessions in European countries, as well as the UK.
As he flew to Saudi Arabia this week – in an attempt to persuade the kingdom to turn on the oil taps – Mr Johnson compared Vladimir Putin to a drug trafficker, urging European countries to “get rid of of this addiction.
And he blamed this addiction for Putin’s murderous assault on Ukraine, saying: “That’s why he feels capable of bombing maternity wards. That’s why he’s emboldened enough to launch indiscriminate assaults on fleeing families.
The UK announced last week that it would end Russian oil imports by the end of the year, while “exploring options” to end gas imports as well.
In a series of coordinated moves, the US went further, announcing an oil and gas ban to deliver “another mighty blow to Putin’s war machine”, Joe Biden said.
The EU plans to cut Russian natural gas consumption by two-thirds this year, while aiming for a complete break with its biggest energy supplier before 2030.
The task is much more difficult for the EU, which depends on Russia for 40% of its gas and around a quarter of its oil – compared to 4% and 8% respectively for the UK.
Indeed, there were fears that the Kremlin could cut off the supply itself, in retaliation for Western sanctions and arms sent to bolster Ukraine’s resistance.
Instead, Russia earns hundreds of millions of dollars a day from its oil and gas exports, undermining sanctions and funding war.
Germany has frozen the approval process for the Nord Stream 2 gas pipeline, which is designed to double the flow of Russian gas.
But the European Central Bank estimated that a 10% cut in gas supply would cut eurozone GDP by 0.7% and said the cut “could be bigger”.
A Treasury spokesman said: “We continue to monitor the impacts of Putin’s invasion of Ukraine on the cost of living here, so we are keeping our approach under review.”