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Red Sea Disruption

Macro Monday, report from the BCC on the impact on British businesses from Red Sea disruption, Ukraine president announces number of deaths since the Russian full-scale invasion, and data releases today.

Macro Monday

In the UK, Brits drink around 95m cups of coffee a day with this figure having grown 25m cups since 2008. The UK however does not even make it in the top 10 when it comes to average coffee consumption. According to Statista, Finland consumes the world’s most coffee per capita at 12kg per person per year. It perhaps comes no surprise, given that Finish law allows for workers to be provided with two coffee breaks per day. Finland is followed by Luxemboutg (11.1 kg pppa), The Netherlands (8.2 kg pppa) and Sweeden (7.7 kg pppa).

BCC Report on the Scale Red Sea Disruption

The British Chamber of Commerce have today published an article on the scale of Red Sea disruption to British businesses. According to the BCC’s Insights Unit, some 37% of more than the 1,000 companies surveyed indicated that they had been impacted by the recent disruptions in the Red Sea. The BCC also said that “55% of UK exporters say they have been impacted by disruption to shipping in the Red Sea.”

The survey also indicated that exporters, manufacturers, and business-to-consumer businesses were disproportionately impacted by the disruptions which has played havoc on global shipping and have led to a rise in freight costs, insurance premiums, increased delivery times and product availability.

Houthi attacks in the Red Sea are continuing to cause major disruptions to global supply chains as freight gets diverted away from the Bab al-Mandab strait. As we’ve looked at, the narrow stretch between the Red Sea and the Gulf of Aden acts as a pinch point to global commerce with around 12% of global shipping passing through it, along with 9% of the world’s natural gas and around 10% of the world’s oil exports.

Over the weekend, US forces continued to attack Houthi targets in Yemen and comes as officials report that there have been 59 attacks on commercial shipping in the area (up to 21 February). As we looked at last week, the EU launched their defensive naval operation, EUNAVFOR ASPIDES to “to restore and safeguard freedom of navigation in the Red Sea and the Gulf”.

Zelensky Announces Battlefield Deaths

Over the weekend, the President Volodymyr Zelensky stated that 31,000 Ukrainian Soldiers have been killed since the Russian full-scale invasion of Ukraine two years ago. It marked one of the few times that a government official had provided such figures, with Kyiv generally keeping the numbers of combat dead and casualties out of public domain. Here, Zelensky said that “31,000 Ukrainian soldiers have died in this war. Not 300,000 or 150,000, or whatever Putin and his lying circle are saying. But each of these losses is a great loss for us.”

Figures on the number of battlefield casualties vary from source to source, with for example the BBC citing how US officials, who were quoted by the New York Times, put the number of Ukrainian combat deaths at 70,000.

Zelensky’s statement follows Russian forces earlier this month taking full control of the Eastern Ukrainian town of Avdiivka after months of fighting during which Zelensky pleaded with Western leaders to release additional support. The fall of Avdiivka represented the most significant Russian victory since the Kremlin’s forces seized Bakhmut in May 2023.

The Ukrainian President also maintained that the $60 billion in aid from the US earmarked for Ukraine was needed within a month. This forms part of a wider $95bn foreign aid package which was approved by the US Senate earlier this month, though continues to face challenges in the House. The package roughly consists of $60bn for Ukraine along with $14bn for Israel, $8bn for Taiwan and Indo-Pacific partners and another $10bn for humanitarian aid.

Tomorrow, President Joe Biden will meet Congressional leaders on Capitol Hill to discuss Ukraine and the aid package.

Today in Focus

In terms of data releases, the week gets off to a light start, though market focus will be firmly centred on geopolitical developments in the Middle East as well as a string of central bank speakers. For example, the BoE’s Chief Economist Huw Pill will be speaking at 11:00 this morning followed by the ECB’s President Christine Lagarde at 16:00. Here, markets will be looking to gain further insight into forward guidance as speculation continues to mount on the extent to which major central banks will cut rates over the coming quarters.