What to know about the UK’s sanctions on Russia

Over the course of the past week, since Russia carried out its “military operations” in Ukraine, the world has responded with great force to condemn Putin’s actions and impose restrictions and sanctions on the country and those with ties to the Russian leader.

Addressing the House of Commons last week, UK prime minister Boris Johnson said the UK was set to implement the “largest and most severe” economic sanctions on Russia, a move it has continued to expand on as time goes by.

Sanctions have included limits on exports to Russia, freezing the assets of Russian banks and restrictions against Russian oligarchs. Similar hefty sanctions have also been carried out by the US.

The long-term effects of the sanctions are not yet clear, however, the short-term effects have seemingly already become known. The value of the rouble and the Russian stock market have continued to plummet as Johnson said the UK will carry on attempting to “squeeze Russia from the global economy piece by piece”.

While much of the sanctions revolve around limiting Russian funding and oligarchs that are considered important or close to Putin, specific businesses are also being required to halt exports to Russia, namely ones that provide dual purpose products, such as transport or military-related goods.

Brand boycotts

Over the week, more and more fashion brands have announced their solidarity with Ukraine and have taken the steps to refrain from operating in Russia on a temporary basis. As the week went on, continued store closures in the country remained as regular announcements, with the likes of Nike, Monki, JD Sports, Bestseller and Hermès being the latest to withdraw.

In a statement also condemning the war, Italy’s fashion organisation Camera Nazionale della Moda said the decision to close retail stores in Russia was “not contemplated by the regulations on sanctions currently in force”. Instead, the fashion group noted these closures were voluntary, by those that operated direct retail distribution, while brands that sold collections through dealers were not able to impose such restrictions due to contractual obligations.

As many brands make their own individual moves, members of UK parliament are calling for further restrictions to be put in place, stating the current sanctions are not strong enough. Speaking in the House of Commons, Labour MP Nick Thomas-Symonds asked parliament to implement a “total ban on the export of luxury goods” to Russia. He added the UK should “get a comprehensive ban in place to stop Putin and his inner circle living in luxury while barbaric, evil acts are perpetrated against the people of Ukraine”.

While the international trade secretary Anne-Marie Trevelyan did not make a statement on the matter, she did comment that the government will continue to look into ways to “tighten the screws” so Putin’s regime finds it more difficult to carry out its military campaign.

Trevelyan added: “We will continue to use all the tools at our disposal to make sure that Putin understands fully the absolutely outrageous behaviour that he’s perpetrating.”

The effect on Russia and retail

The luxury market has largely been exempt from the EU and UK sanctions, allowing brands to continue operating in the country without legal repercussions. However, while many have taken the step to do so on their own, it is clear the industry could be hit hard by the move.

According to the BBC, Russia was the fifth largest European retail market in 2021, valued at around 337 billion pounds and making it a prime location for emerging market growth. Possibly in consideration of this, many brand statements have made it clear that decisions to pull out of the market are only temporary, rather than withdrawing altogether, leaving the door open to return at a later date.

However, as sanctions continue to limit forms of payment, only enhanced by Mastercard, Visa and American Express recently pulling out, the business climate and fulfilling orders in the region have become increasingly challenging.

Burberry, one of the most recent luxury names to remove itself from Russia, continued to run its site in the country up until Sunday evening. However, a spokesperson for the British brand told Bloomberg that it had decided to stop making shipments to Russia “due to operational challenges”. While its two stores and one concession stand have not closed, it's online store is no longer operating.