Will the economic shocks of war spark a global recession?

If there is a recession, it will be different from our previous experiences, writes Hamish McRae

Some market analysts expect oil to reach $150 a barrel (Getty/iStock)

The economic costs mount. The burden that the economies of the rest of the world will have to bear is nothing to the burden carried by the Ukrainian people. But as the violent movements of the past few days on the markets show – the oil price reached $130 a barrel yesterday – there will be grave economic disruption in the coming months.

How grave? This is such a fast-moving story that any commentary can only be a snapshot at a moment in time. However, the best way to gauge the impact of what is happening is to separate the various forces at work and then see how each might affect us all.

Start with energy, because that is the way Russia most directly affects the world economy. There will be some sort of embargo on Russian exports. We have had Shell stopping buying Russian oil and gas, and President Biden is expected to announce an embargo today. The UK announced a ban too. Germany’s position, and that of the EU, is unclear despite a plea from Volodymyr Zelensky that Europe should stop “giving money to a terrorist”. The US is putting pressure on Germany to join the embargo but whether it does or not, Russian supplies of oil and gas will diminish in the weeks ahead. The price of both will rise further.