UK pledges £2.4bn to help rebuild Ukraine

Ukraine’s allies met in south London yesterday to discuss how to rebuild the war-torn country’s economy.

In a room full of foreign ministers, civil servants, bankers and development experts, Britain, the European Union and the United States pledged billions of pounds to support the Ukrainian economy.

Opening Ukraine’s recovery conference, Prime Minister Rishi Sunak said the UK would pledge a further £2.4bn in financial support – including guarantees to unlock credit opportunities for the country and new war risk insurance measures to help more companies invest there.

“The war has proven how much Ukraine has to offer,” Sunak said. ‘When I visited Kiev in November, I saw this with my own eyes. I saw the incredible spirit of Ukraine. A spirit, yes, of strength and resistance, but also of ingenuity and innovation.’

The US will also send an additional £1 billion to Ukraine to “overhaul its energy grid” and modernize other critical infrastructure, while the European Commission said it would provide Ukraine with £43 billion between 2024 and 2027.

Since Russia invaded the country last February, President Volodymyr Zelensky and his cabinet have been on a mission to keep the country open for business.

In September, he launched Advantage Ukraine, an initiative to keep private sector money flowing into the country despite the ongoing war.

At the time, Zelensky heralded it as one of the greatest rebuilding opportunities since World War II.

Between 2003 and 2014, more than £170 billion was spent rebuilding Iraq after the 2003 United States-led invasion.

The US alone has spent £47 billion over nine years – about £12 million a day – rebuilding the country.

Sunak said more than 400 companies from 38 countries had joined the Ukraine Business Compact, a show of support for this recovery. The list includes BT and Rolls-Royce, among others.

Zelensky urged Western companies to honor their commitments. “We need to move from vision to agreements and from agreements to real projects,” he told the conference during a video call.

But with estimates suggesting it would take more than a decade and cost between $400 billion (£314 billion) and $1 trillion to rebuild Ukraine’s economy, it’s no mean feat.

Trade: Ukrainian President Volodymyr Zelensky (pictured) and his cabinet have been on a mission to keep the country open for business

And it is Oleksandr Gryban, Ukraine’s deputy economy minister, who has been tasked with getting this reboot off the ground.

Gryban leads Advantage Ukraine and has set his sights on removing some of the risks for foreign investors, including tax breaks and insurance policies.

Speaking to the Daily Mail, Gryban said Britain remains a “reliable partner” for Ukraine and stands up for what the country has to offer.

So far, 30 UK companies have committed to Advantage Ukraine, mainly in the defense and construction sectors.

In total, the initiative has 85 projects in the pipeline, worth more than £8 billion. This is despite the fact that interest rates in Ukraine have been kept at 25 percent since June last year and inflation was 15.4 percent in May.

The hope is that the reconstruction of Ukraine will be helped by investing in small and medium-sized projects.

But this effort to get private money into the country was aided by the Ukrainian government’s deal with Blackrock, the world’s largest asset manager.

Blackrock will advise Kiev on “how to structure the country’s reconstruction funds.” Ukraine has long been known for its economic potential thanks to its abundance of natural resources – historically known as the ‘breadbasket of Europe’ – and its young tech talent.

It has become a major hub for website design in recent years, with 200,000 software developers in the country despite a population of just 43 million.

Ukrainian entrepreneurs are behind companies like PayPal, WhatsApp and Revolut, and the tech industry was still having a record year in 2022.

Russ Shaw, founder of Tech London Advocates, said: “British companies will have significant opportunities to help Ukraine with its economic recovery, especially in technology.”

Stefan Weiler, JP Morgan’s head of debt capital markets for Central and Eastern Europe, the Middle East and Africa, said private investors see Ukraine as a “huge opportunity.”