Global recession a 'genuine concern', Western officials warn

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·Political Correspondent, Yahoo News UK
·3-min read
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View of The Garrick Arms, closed and boarded up due to the Coronavirus pandemic on Charing Cross Road, London. Picture date: Thursday 25th June 2020. Photo credit should read: David Jensen/EMPICS Entertainment
Western officials have warned there is a growing risk of a global recession. (PA)

Western officials have warned that the risk of a global recession is rising due to the war in Ukraine as the cost-of-living crisis deepens globally.

Russia's illegal invasion of Ukraine in February has been cited by experts as a key reason for driving up the cost of living due to the role both countries play in energy and food supplies.

Ukraine is one of the world's largest exports of wheat and cooking oil, with Russia a major exporter of natural gas and oil.

But interruptions in supply chains and sanctions, coupled with a sharp rise in demand for commodities as the world exits lockdown, has caused prices to rocket.

The UN's global food price index hit 158.5 in April 2022, slightly down by 1.2 points from its all time high in March 2022.

Read more: UK inflation is nearly 11% for poorest households, think tanks say

On Wednesday, the ONS announced UK inflation hit 9% amid the soaring cost of food and fuel - the highest in 40 years.

“There is a major risk of global stagflation, cost-of-living crisis, inflation and risk of global recession," western officials said on Wednesday.

"That is affecting all countries.

"I think [in] UK we’re already seeing... [the government has] taken [measures] to address the cost-of-living crisis, but also to fulfil our commitment to the rest of the world."

A damaged building is pictured in Saltivka district, amid Russia's attack on Ukraine, in Kharkiv, Ukraine, May 17, 2022. REUTERS/Ricardo Moraes
Russia's illegal invasion of Ukraine has been cited as a key reason for the soaring cost of food and energy. (Reuters)

Western officials also warned Russia is blocking exports of commodities like wheat from Ukraine - and even stealing it.

It comes after Bank of England governor, Andrew Bailey, told MPs on Monday Ukraine is unable to get their supplies out of the country.

“Two things the [Ukrainian] finance minister said is that there is food in store but they can’t get it out," said said Bailey at a Treasury select committee in parliament.

“While he was optimistic about crop planting, as a major supplier of wheat and cooking oil, he said we have no way of shipping it out and that is getting worse.

Read more: People ‘stealing soap and sanitary products’ because of cost-of-living crisis

“It is a major worry for this country and a major worry for the developing world.”

A research paper published by Chatham House in April warned measures like unprecedented economic sanctions as a result of the invasion have "caused prices of commodities to skyrocket" globally.

"Before the conflict, demand for global resources already exceeded supply and drove up prices as economies rebounded after the COVID-19 pandemic," it said.

Governor of the Bank of England Andrew Bailey speaking at a Monetary Policy Report press conference at the Bank of England in London. Picture date: Thursday February 3, 2022.
Bank of England governor Andrew Bailey warned earlier this month that the UK could fall into a recession by the end of the year. (PA)

"This gave rise to a global cost-of-living crisis, characterised by increasing levels of energy and food poverty.

"This situation is likely to become much worse as a consequence of the war in Ukraine, and poses a threat to human security, particularly among low-income and vulnerable populations."

The warnings of a global recession come as fears of a domestic recession in the UK grow - with the ONS reporting the UK economy shrank by 0.1% in March.

Miatta Fahnbulleh, CEO at the New Economics Foundation (NEF), warned earlier this month that the UK is on the "cusp of recession".

Read more: People attempting suicide because of cost-of-living crisis, warns MP

"UK GDP only increased by an estimated 0.8% in Q1," Fahnbulleh tweeted.

"And this is before the impacts of increased interest rates and soaring energy bills have fed through.

"We are now on the cusp of recession — spiralling prices and a stuttering economy. The worst of all worlds."

Watch: China’s economic activity in April adds to recession fears

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