The grim arithmetic of war was on full display yesterday as British rescue teams in Ukraine pulled survivors from the rubble of a Russian strike that has now claimed 22 lives. This, while the City’s FTSE 100 barely flinched, proving once again that financial markets have a remarkable capacity for absorbing tragedy when it is geographically distant. Yet for those on the ground, the human cost is stark and immediate.
The death toll, revised upward from an initial 18, underscores the brutal efficiency of Moscow’s campaign against civilian infrastructure. For the UK teams operating under the auspices of the International Rescue Corps, every extraction from the debris is a minuscule victory in a war of attrition. But let us be clear: this is a humanitarian effort that carries no direct economic benefit for British taxpayers.
It is a moral investment, and one that is largely backed by government borrowing. As gilt yields hover around 4.2 per cent, one wonders how long the public appetite for such foreign aid will hold.
The Bank of England’s battle against inflation, currently at 3.2 per cent, is far from won, and every pound spent in Ukraine is a pound not deployed to shore up the domestic economy. Capital flight from emerging markets to London has provided some buffer, but the resilience of sterling is a double-edged sword: it masks the cost of imports while exports languish.
The real bottom line is this: the strike, likely using Iranian-designed drones, is a reminder that the conflict in Ukraine remains a major driver of global uncertainty and energy price volatility. For now, the rescuers dig. But the fiscal bookkeepers are watching.
