Russian sanctions may demolish British jobs, says JCB boss

Tory donor Lord Bamford says it would be 'absurd' for JCB to suffer due to sanctions 'coming out of Brussels'.

by Rachel Savage
Last Updated: 18 May 2015

With Putin’s regime public enemy number one, most businesspeople are (probably sensibly) keeping their heads down about the negative impact of Russian sanctions, save for a few muted profit warnings. JCB chairman Lord Anthony Bamford, however, has no such qualms about making his feelings known.

‘It seems absurd that a leading UK exporter, successfully selling machinery to construction companies and farmers in Russia, could be affected so dramatically by EU sanctions coming out of Brussels,’ the somewhat Eurosceptic Tory donor told the Telegraph, warning that sanctions restricting ‘sales of machines and spare parts… could put hundreds of British jobs at risk.’

Bamford’s comments come after EU governments ramped up sanctions to cover Russia’s defence, finance and oil industries last week. ‘It will affect our economy … but you can’t make an omelette without breaking eggs,’ UK foreign secretary Philip Hammond told Sky, while Poland admitted the measures would shave 0.6% of its GDP this year.

Meanwhile, President Obama tried to appear entirely unconcerned (and had an easier job given the US is far less dependent on Russian trade than Europe). ‘Russia doesn’t make anything. Immigrants aren’t rushing to Moscow in search of opportunity. The life expectancy of the Russian male is around 60 years old. The population is shrinking,’ he told the Economist in an interview over the weekend.

That may well be the case, but it won’t stop sanctions affecting companies like JCB, which has been exporting to the ex-Soviet nation since 1979. Last September, it opened a £6m dealer depot, its largest in the world, in Russia’s fourth-largest city Ekaterinburg. But it reported in May yearly earnings (on an EBITDA basis) fell almost 15% to £313m due to ‘weaker demand’ in ‘fragile economies’ like Russia.

And with fighting in eastern Ukraine still limiting access to the MH17 crash site and Putin looking unlikely to push his alleged protégés into a ceasefire or otherwise, it looks like sanctions are here to stay. Bamford and his fellow exporters are going to have to dig in for now - especially as sanctions would probably be more stringent if the UK wasn't in the EU at all.

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