What is inflation and how is it measured?


Inflation is the increase in overall cost of living over a period of time. Inflation causes currency to devalue and lose its purchasing power. Inflation is measured through the CPI, or consumer price index, which involves a basket of popular goods and services such as food and transportation. Changes in the prices of these goods and services are compared every year to determine an accurate inflation rate. 


What are economic sanctions and what do they mean for the British economy?


Economic sanctions, simply put, are actions taken by one or more nations with the desire to harm the economy of another nation or nations. This is generally done to try and achieve political change. Whilst economic sanctions can be very effective they also have a significant downside; they also harm the economy of the nation(s) who issue the economic sanctions. In the case of Russia it has been heavily sanctioned by NATO. Due to Britain being a member of NATO or should be expected that there will be a significant period of economic decline due to the war in Ukraine. 


Historically, how successful have economic sanctions been?


It is safe to say that in the past economic sanctions have generally been mildly effective in punishing aggressive or uncooperative nations. If they weren’t effective then countries like Britain would utilise this strategy. However, whilst these sanctions can be effective in crippling a country's economy and preventing them from committing further hostile actions, they generally work on less powerful countries. And whilst Russia has a small GDP in comparison to Western nations it still boasts a large military and clearly has lots of land and natural resources allowing them to remain fairly self reliant. That’s not to say that the economic sanctions won’t be effective. Because of the Russian Ruble being devalued due to inflation caused by sanctions leading to 1 Russian Ruble being worth 0.0093 Pound Sterling, Russia now has less capital to spend on military which is the only investment with no clear return. So in effect Russia’s military capabilities will be diminished and its citizens will likely either blame Putin for their lower standards of living or have a growing resentment towards the West. 


Overall, along with the Coronavirus, the war in Ukraine has caused much economic decline which can be felt across the world. As a net importer the UK would therefore take a significant blow with inflation being high. Economic sanctions wouldn’t make the situation any better but at least they would work towards ending the Russian invasion of Ukraine.