Russia sanctions-busting? Big questions remain over UK car exports

Published

12 months ago

April 26, 2024

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The extraordinary, unprecedented and largely unexplained flows of millions of pounds of British luxury cars into states neighbouring Russia continued in February, according to new official data.

Some £26m worth of British cars were exported to Azerbaijan in February, according to data from HM Revenue & Customs.

The numbers show that in the latest quarter this former Soviet state with developing economy status was the 17th biggest destination for UK cars, bigger than long-established export markets such as Ireland, Portugal and Qatar.

Azerbaijan’s ascent has coincided almost to the month with the imposition of sanctions on the export of cars to Russia.

British cars are banned from being sent into Russia, both as “dual use” goods, which could be repurposed as weapons, and, for any cars over the value of £42,000, under specific luxury goods restrictions.

However, even as UK car exports to Russia plummeted to zero, they have risen sharply to states neighbouring Russia, including Kazakhstan, Kyrgyzstan, Georgia and, most notably of all, Azerbaijan.

While it is impossible to prove where those shipments end up eventually, there is plentiful anecdotal evidence that these countries are being used as conduits to smuggle banned goods to Russia.

The latest HMRC data shows that in the three months to February, the average value of the cars being sent to Azerbaijan was over £115,000, making this small, relatively poor economy one of the most high-value luxury car markets in the world – alongside Switzerland, Luxembourg and Saudi Arabia.

The total value of UK car exports to Azerbaijan in the two years since the invasion of Ukraine and the imposition of sanctions is now £523m. That compares to £58m in the immediately preceding two years.

Britain’s motor lobby group, the Society of Motor Manufacturers and Traders (SMMT), has insisted that this 800% increase can be explained by domestic factors in the Azerbaijani economy – and is not connected with Russian sanctions.

An SMMT spokesperson said: “UK carmakers comply with all trade sanctions and would condemn any party putting that commitment at risk. Car exports from UK factories to Azerbaijan have grown since 2019 due to multiple factors, including significant new model launches, pent-up demand and a growing domestic appetite for UK luxury cars. Indeed, UN data shows that just two cars of any origin have been officially exported from Azerbaijan to Russia this year.

“We have never ruled out the possibility that third parties might exploit any vulnerabilities in the sanction regime, and manufacturers do everything in their power to prevent this. Any UK-built vehicle on sale in Russia found its way there without their authorisation. This is a fast-moving global issue covering products from multiple sectors in many countries deploying sanctions, and tackling any vulnerabilities requires a coordinated, global response.”

However, while United Nations (UN) data suggests the quantity of cars being officially exported to Russia remains low, that same evidence suggests that, far from behaving like a normal car market, Azerbaijan does seem to be funnelling cars off elsewhere into Central Asia.

Contrary to the SMMT’s analysis, which suggests the car exports can be explained by domestic factors, car exports from Azerbaijan have risen by 4,800% since the invasion of Russia, with most of the cars destined (according to UN data) for Kazakhstan, Kyrgyzstan, Georgia and the United Arab Emirates.

According to UK government sources, these states are understood to be widely used as conduits for goods into Russia.

Cars are not the only British goods to have seen a large spike in exports to Central Asia and the Caucasus – so too have components and machinery used to make weapons. In a visit to Kyrgyzstan this week, Foreign Secretary Lord Cameron admitted that Russia is using central Asian countries to sidestep sanctions and build its “war machine”.

Business

Eco-tycoon Vince weighs sale of solar energy project

Published

3 hours ago

April 6, 2025

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Eco-tycoon Vince weighs sale of solar energy project

The energy group founded by Dale Vince, the eco-tycoon, is kicking off a hunt for investors in a solar park which is expected to become one of Britain’s biggest renewable energy projects.

Sky News understands that Ecotricity, Mr Vince’s company, has hired KPMG to explore talks with prospective investors or buyers for the project at Heckington Fen in Lincolnshire.

The development was approved by Ed Miliband, the energy secretary, earlier this year, and when completed it is expected to generate roughly 600MW of solar power.

It has been designated a Nationally Significant Infrastructure Project by the government.

Heckington Fen will also provide 400MW of battery storage capacity.

According to documents circulated to potential bidders, Ecotricity is prioritising the sale of 100% of the project, but is open to retaining a minority stake.

The company wants to complete a deal during the third quarter of the year.

Responding to an enquiry from Sky News, Mr Vince said: “Heckington Fen is a fabulous opportunity; it’s also a massive one, possibly the biggest onshore renewable initiative in Britain.

“The project is shovel-ready with a grid connection in 2028 – something which is increasingly hard to find these days.

“Whilst this is a great project which is going to go ahead, the sums of money required to build this alone in a short timeframe, means we’re looking for investors or partners to help make this happen.”

Business

Sir Keir Starmer pledges to protect UK companies from Trump tariff ‘storm’

Published

12 hours ago

April 6, 2025

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Sir Keir Starmer pledges to protect UK companies from Trump tariff 'storm'

Sir Keir Starmer has said his government stands ready to use industrial policy to “shelter British business from the storm” after Donald Trump’s new 10% tariff kicked in.

The UK was among a number of countries hit with the lowest import duty rate following the president’s announcement on 2 April – which he called ‘Liberation Day’, while other nations, such as Vietnam, Cambodia and China face much higher US levies.

But a global trade war will hurt the UK’s open economy.

The prime minister said “these new times demand a new mentality”, after the 10% tax on British imports into America came into force on Saturday. A 25% US levy on all foreign car imports was introduced on Thursday.

It comes as Jaguar Land Rover announced it would “pause” shipments to the US for a month, as firms grapple with the new taxes.

On Saturday, the car manufacturer said it was working to “address the new trading terms” and was looking to “develop our mid to longer-term plans”.

Referring to the tariffs, Sir Keir said “the immediate priority is to keep calm and fight for the best deal”.

Writing in The Sunday Telegraph, he said that in the coming days “we will turbocharge plans that will improve our domestic competitiveness”, adding: “We stand ready to use industrial policy to help shelter British business from the storm.”

It is believed a number of announcements could be made soon as ministers look to encourage growth.

NI contribution rate for employers goes up

From Sunday, the rate of employer NICs (national insurance contributions) increased from 13.8% to 15%.

At the same time, firms will also pay more because the government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.

Also, the FTSE 100 of leading UK companies had its worst day of trading since the start of the pandemic on Friday, with banks among some of the firms to suffer the sharpest losses.

Sir Keir said: “This week, the government will do everything necessary to protect Britain’s national interest. Because when global economic sands are shifting, our laser focus on delivering for Britain will not. And these new times demand a new mentality.”

UK spared highest tariff rates

Some of the highest rates have been applied to “worst offender” countries including some in Southeast Asia. Imports from Cambodia will be subject to a 49% tariff, while those from Vietnam will face a 46% rate. Chinese goods will be hit with a 34% tariff.

Imports from France will have a 20% tariff, the rate which has been set for European Union nations. These will come into effect on 9 April.

Sir Keir has been speaking to foreign leaders on the phone over the weekend, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Australian Prime Minister Anthony Albanese, to discuss the tariff changes.

A Downing Street spokesperson said of the conversation between Sir Keir and Mr Macron: “They agreed that a trade war was in nobody’s interests but nothing should be off the table and that it was important to keep business updated on developments.

“The prime minister and president also shared their concerns about the global economic and security impact, particularly in Southeast Asia.”

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Trump’s warning

Mr Trump has warned Americans the tariffs “won’t be easy”, but urged them to “hang tough”.

In a post on his Truth Social platform, he said: “We are bringing back jobs and businesses like never before.

“Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!

“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”

Business

Santander UK lines up ex-Treasury chief Scholar as new chair

Published

2 days ago

April 5, 2025

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Santander UK lines up ex-Treasury chief Scholar as new chair

Sir Tom Scholar, the former top Treasury civil servant sacked by Liz Truss during her premiership, is being lined up as the next chairman of Santander UK, Britain’s fifth-biggest high street bank.

Sky News has learnt that Sir Tom, who played a pivotal role in the UK’s response to the 2008 financial crisis, is the leading candidate to replace William Vereker.

The appointment, which is subject to regulatory approval, could be announced later in the spring, according to insiders.

Sir Tom’s prospective recruitment comes amid a period of intense speculation about the future of Santander UK, which bulked up rapidly during the banking crisis by absorbing Alliance & Leicester and Bradford & Bingley.

The Spanish banking giant entered the British retail market in 2004 when it bought Abbey National, setting in motion a chain of dealmaking which would result in it becoming a serious challenger to Barclays, Lloyds Banking Group and NatWest Group.

If confirmed in the role, Sir Tom will follow a pattern of former senior public officials in taking on the chairmanship of Santander UK.

The post has been held in the past by Baroness Vadera, a Treasury minister during the 2008 meltdown, and Lord Burns, the former Treasury permanent secretary.

Sir Tom also held that latter role until his ousting during the shortlived Truss government, which led to him receiving a payoff of more than £350,000.

In addition to his position during the banking crisis, he was instrumental in devising the COVID-19 furlough scheme, which protected millions of private sector jobs during the series of lockdowns imposed on the British public.

He was widely respected among international banking regulators and finance ministers, and his sacking by Ms Truss sparked fury among senior civil servants.

Since leaving the Treasury, he has been appointed as chair of the European operations of Nomura, the Japanese bank.

At Santander UK, he will work closely with Mike Regnier, the former building society boss who has been its chief executive since 2022.

In recent months, there has been growing speculation that Santander UK’s parent is open to a sale of the business amid frustration about the scope and burden of British banking regulation.

Both Barclays and NatWest have been sounded out about a potential merger of their UK retail businesses with that of Santander UK, although formal talks have not progressed to a meaningful stage.

Ana Botin, Santander’s group executive chair, has appeared to publicly rule out a disposal, saying that the UK remains a “core market” for the group.

An attractively priced offer could yet gain Ms Botin’s attention, according to people close to the earlier talks.

One insider said, however, that Sir Tom’s recruitment was likely to dampen further speculation about a possible sale of the British business.

Shares in the Madrid-listed parent company, Banco Santander, have performed strongly in recent months, but fell by more than 8% on Friday as investors digested the fallout from President Donald Trump’s global tariffs blitz.

The company now has a market capitalisation of about €83.25bn (£70.7bn).

City sources said the search for Mr Vereker’s successor had been led by Heidrick & Struggles, the headhunter, in conjunction with Baroness Morgan, the former cabinet minister who sits on Santander UK’s board as its senior independent director.

This weekend, Santander UK said in a statement issued to Sky News: “Santander UK is conducting a thorough appointment process.

“The new chair will be announced once that process has concluded, including having obtained board and regulatory approval.”