Another session of Business Council in the Embassy of Russian Federation was held on 13th april 2015 with participation of representatives of Russian companies doing business on the territory of the UK. The Ambassador A. Yakovenko informed participants about the state of Russo-British economic relations and negative impact of sanctions on trade between Russia and the UK, whose volume decreased by 52% in 2015 in comparison to similar period of previous year.
Economic co-operation has traditionally been a priority area of Russia-UK relations. However, recent general deterioration of the political dialogue affected trade and economic ties in 2014. According to the Embassy of the Russian Federation to the UK, the interaction within key official co-operation mechanisms, including UK-Russia Joint Steering Committee on Trade and Investment as well as High level Energy Dialogue, was frozen on London’s initiative. The implementation of anti-Russian sanctions within the EU alongside with a drop of the oil prices led to a slowdown of Russian-British trade by 21% in 2014 to $19.3 bn.
However, British business community being interested in continuing normal relations with Russia adheres to the constructive approach and does not support the attempts to politicize economic relations. This is specifically the reason why the UK could maintain the position of one of Russia’s leading foreign trade and investment partners so far.
In spite of obstacles preventing Russian capital from coming to the British market, its business presence in the UK is also significant. The financial sector, energy, retail trade, mechanical engineering, metallurgy, mineral resources industry, transport, communications, pharmaceuticals and real estate are among the most attractive areas of investment co-operation. There remains high interest in bilateral co-operation between countries’ regions.
Russian companies are well represented on the London Stock Exchange that is still the leading international platform for accessing investors on global capital markets with more than 50 Russian and Russian-focused companies traded on the LSE. The latest meeting of the relevant Joint Liaison Group took place in July 2014 at the International Investment Bank in Moscow with the participation of over 40 financial and related industry professionals from both Russia and the UK.
Despite the imposition of EU sanctions against Russia, the UK government will continue to offer companies support and advice, which allows them to continue developing mutually beneficial ties and preventing bilateral trade and economic relations from further deterioration.
UK Trade & Investment is focusing on:
- supporting companies in their trade and investment activities between the UK and Russia;
- improving the business climate with reduced corruption, increased transparency and rule of law;
- working to ensure the UK becomes Russia’s main EU partner in research and innovation in important areas including nanotechnology space and accelerator science;
- running a UK Border Agency operation that fully supports the UK’s goals overseas to reduce net migration, protect economic growth, and select the brightest and the best to work and study in the UK.
The UK’s open, transparent and business-friendly system makes it easy to start up a new company and there are no separate rules for foreign business entities. The UK is the №1 destination for Foreign Direct Investment in Europe. More companies locate their European headquarters in the UK then anywhere else in Europe. They choose to expand or move their businesses to the UK due to people with the talent and right skills, a simple and competitive tax rate system and a transparent regulatory system making it easier to do business.
Thus, the government is working to improve the UK’s reputation as a place to do business, to broker commercial partnerships and to increase inward investment, including Russian, in UK companies and infrastructure projects.
- The Embassy of the Russian Federation to the United Kingdom of Great Britain and Northern Ireland: www.rusemb.org.uk/economy
- UK Trade & Investment: www.gov.uk/government/priority/increasing-business-with-russia
By Anna Maximova, PhD in economics