Cost of living crisis will get worse as a result of Russian sanctions, minister admits

‘It is right that we are prepared to take an economic hit,’ Liz Truss says

‘We’re fighting for freedom and democracy, and that has a very high cost for us,’ said the foreign secretary (PA)

Sanctions imposed on Russia in retaliation for the invasion of Ukraine will make the domestic cost of living crisis worse, a cabinet minister has admitted.

Liz Truss said Britain must be prepared to take an “economic hit”, but insisted it would be “far worse” to allow Vladimir Putin to succeed in his military offensive in Ukraine.

As pressure builds for further sanctions against the Kremlin, the foreign secretary said the UK government was drawing up a “hit list” of oligarchs whose property and assets would be targeted.

Earlier this week, No 10 imposed asset freezes on several Russian banks, airlines, and billionaires associated with the Kremlin, and said that sanctions would be targeted personally at the Russian president.

Over the weekend, the US, the UK and the EU also agreed to ban “selected” Russian banks from the global payments system Swift, which connects thousands of financial institutions around the world.

“We are taking apart every bit of the Russian system,” Ms Truss told the BBC’s Sunday Morning programme.

But asked about the domestic toll, and whether the cost of living would rise even more, the cabinet minister replied: “That is correct. That is correct. But the pain that we will face in the United Kingdom is nothing like the pain people in Ukraine are currently facing.”

She added: “They are having to take up arms in the face of an appalling dictator using untold weapons on their country, and that is what we have to remember.

“We aren’t just fighting for the people of Ukraine and the sovereignty of Ukraine, we’re fighting for freedom and democracy, and that has a very high cost for us.

“It is right that we are prepared to take an economic hit, because the alternative of allowing Putin to succeed will be far worse for peace and democracy across Europe.”

The foreign secretary says ‘it is right that we are prepared to take an economic hit' (PA)

Her comments are likely to be met with frustration from opposition parties and backbench Conservative MPs, who have for months been urging the government to drop a manifesto-busting tax increase.

Despite alarm over the cost of living, with energy bills also set to rocket in April, Boris Johnson has resisted pressure to scrap plans to increase national insurance contributions by 1.25 percentage points.

Speaking to the Sunday Mirror, Rachel Reeves, the shadow chancellor, said: “In the face of Russian aggression, we must bring in the hardest possible sanctions against all those linked to Putin.”

However, Ms Reeves added: “Alongside this, the government must also seriously think again about how rising costs and looming tax rises will hit working people here.”

The Liberal Democrat leader, Sir Ed Davey, has also urged the government to introduce an “oligarch tax” in an attempt to insulate UK consumers from any further gas price hikes.

He said: “While British families face more cost of living misery, Putin’s cronies have been getting away with it. It is Russian oligarchs and energy companies who must foot the bill for any gas price spike following the Russian invasion of Ukraine.

“An ‘oligarch tax’ will send a clear signal to Putin that we will take tough measures to combat his aggression – and insulate the British public from any side effects.”