In the first three quarters of 2021, the UK had a trade deficit with Russia. This means the value of UK imports from Russia exceeded the value of its exports to Russia. The total value of exports to Russia was £3.3 billion. The total value of imports was £8.3 billion. A breakdown of the UK’s trade with Russia in the first three quarters of 2021 is shown in table 1. The trade deficit was caused by the UK’s deficit in its goods trade. The UK had a surplus in its services trade with Russia.
Table 1: UK trade with Russia, Q1–Q3 2021
|Total trade (£ millions)||Goods trade
Source: Office for National Statistics, ‘UK total trade: all countries, non-seasonally adjusted’, 27 January 2022.
Goods trade with Russia
In 2021, the most imported goods from Russia were oil, metal, and gas products. The most exported goods were cars, pharmaceutical products, specialised machinery, and power generators. This is shown in the graphic below, reproduced from the Office for National Statistics (ONS).
Source: ONS, ‘UK trade: December 2021’, 11 February 2022. The ONS defines ‘unspecified goods’ as uncategorised goods such as parcel post, low value trade, and non-monetary gold.
Services trade with Russia
Table 2 shows the top five most traded services with Russia in the first three quarters of 2021. The most exported services were ‘other business services’, telecommunications and IT services, and financial services. The ONS defines ‘other business services’ to include research and development, professional and management consulting services, legal and accounting services, and trade-related services, such as architecture and engineering.
The UK’s services imports from Russia were dominated by ‘other business services’, financial services, and telecommunications and IT services.
Table 2: UK services trade with Russia, Q1–Q3 2021
|Imports||Value (£ millions)||Exports||Value (£ millions)|
|Other business services||315||Other business services||275|
|Telecoms and IT||215||Other business services||104|
|Financial services||200||Telecoms and IT||61|
|Intellectual property||108||Government services||50|
|Insurance and pensions||100||Transport||46|
Source: ONS, ‘UK trade in services: service type by partner country, non-seasonally adjusted’, 27 January 2022.
Trends in trade with Russia
The UK does not have a bilateral trade agreement with Russia, and it trades with the country on World Trade Organization terms.
Economic relations have been impacted by the UK’s foreign relations with Russia in recent years. Relations have been affected by events such as: the poisoning of the former Russian security agent Alexander Litvinenko in London in 2006, Russia’s 2014 invasion of Ukraine and the annexation of Crimea, and the Salisbury novichok attack in 2018. There have also been allegations that Russia has attempted to interfere in the UK’s domestic politics, such as in the 2016 EU referendum and the 2019 general election. Following Russia’s invasion of Ukraine in February 2022, the UK has imposed extensive economic sanctions on Russia.
The graph below shows the trend in the value of the UK’s trade with Russia from 2004 to 2020 (the last full year for which data is available). The trend shows a decline in imports and exports following the global financial crisis in 2008. Trade subsequently increased, but then decreased around 2014, coinciding with the imposition of EU-wide sanctions on Russia following its invasion of Ukraine. Although imports increased since that date, exports to Russia have remained broadly at their reduced level.
Graph 1: UK total trade with Russia (goods and services), 2000–2020 (£ millions)
Source: ONS, ‘UK total trade: all countries, non-seasonally adjusted’, 27 January 2022.
2022 invasion of Ukraine: economic sanctions
In January 2022, in response to the build-up of Russian military forces along the borders of Ukraine, the Foreign Secretary, Liz Truss, told the House of Commons that the Government was preparing an “unprecedented package of coordinated sanctions” against Russia.
The legislation to implement the sanctions, the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022, was laid before Parliament and entered into force on 10 February 2022. The regulations amended regulations made in 2019, which replaced the EU sanctions regime against Russia in preparation for the end of the UK’s Brexit transition period in 2020. The 2022 regulations broadened the definition of an ‘involved person’ for the purposes of targeting Russian individuals or entities involved in support of the Russian Government.
On 21 February 2022, Russia officially recognised the self-declared independence of two regions of eastern Ukraine under the control of Russian-backed separatist forces, and deployed “peacekeeping” forces to the region. In response, the UK Prime Minister, Boris Johnson, condemned the attack on Ukraine’s territory and sovereignty. He announced that sanctions would be imposed on five Russian banks and three “very high net worth” individuals. The Labour leader, Keir Starmer, supported the sanctions, but said that they did not go far enough.
On 24 February 2022, Russia escalated its military action in Ukraine, including the launch of military attacks on the capital, Kyiv. In response, the Prime Minister told the House of Commons that the UK was implementing “the largest and most severe package of economic sanctions that Russia has ever seen”. He claimed that the sanctions would “totally exclude” Russian banks from the UK’s financial system, and that asset freezes would apply to “more than 100” Russian entities and individuals. He also said the Government would bring forward new legislation to:
Ban the export of all dual-use items to Russia, including a range of high-end and critical technological equipment and components in sectors including electronics, telecommunications and aerospace.
On 26 February 2022, the EU, UK, US and Canada announced more sanctions, intended to “further isolate Russia from the international financial system”. The measures included the removal of “selected Russian banks” from the SWIFT financial messaging system. The sanctions also targeted the Russian Central Bank, to prevent it “deploying its international reserves in ways that undermine the impact of our sanctions”.
On 28 February 2022, Liz Truss made a statement in the House of Commons on the legislation being introduced to implement the sanctions previously announced by the Prime Minister on 24 February 2022. Ms Truss said that the impact of the sanctions already imposed on Russia had caused the value of the Russian rouble to fall by 40%, and “$250 billion has been wiped off the Russian stock market”. She said the Government would be laying two new pieces of legislation:
The first will introduce a set of new powers against Russia’s financial sector, including powers to prevent Russian banks from clearing payments in sterling […] The second piece of legislation will ban exports to Russia across a range of critical sectors. This includes high-end technological equipment such as microelectronics and marine and navigation equipment. This will blunt Russia’s military-industrial capabilities and act as a drag on Russia’s economy for years to come.
The legislation was made and laid before Parliament on 28 February 2022 as the Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022, and the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022, respectively. They both entered into force on 1 March 2022.
- Foreign, Commonwealth and Development Office, ‘UK sanctions relating to Russia’, 1 March 2022
- House of Lords Library, ‘Conflict in Ukraine: reading list’, 25 February 2022
- House of Commons Library, ‘Ukraine crisis’, 1 March 2022
- Eir Nolsoe and Valentina Pop, ‘Russia sanctions list: What the west imposed over the Ukraine invasion’, Financial Times (£), 27 February 2022
- BBC News, ‘How badly will Russia be hit by new sanctions?’, 27 February 2022
- Debate on ‘Ukraine’, HL Hansard, 25 February 2022, cols 451–530
- Department for International Trade, Trade and Investment Factsheets: Russia, 18 February 2022
This article was updated on 1 March 2022.