Russia launched a full-scale invasion on its neighbour in the early hours of this morning, with the shockwaves felt in international stock markets.

Fears about a long bloody conflict, additional sanctions and higher inflation saw market benchmarks in Tokyo and Seoul fall 2%, while Hong Kong and Sydney lost more than 3%. The London stock market was down 2.5% in early trading, with the leading Paris and Frankfurt indices also down about 3%.

So, what will the conflict mean for Brits’ investments and day-to-day finances?

Investors advised to sit tight

Financial advisers have advised investors not to panic or make knee-jerk changes to their portfolios in the wake of the crisis.

Scott Gallacher, a chartered financial planner at Rowley Turton, said: “Volatility is part and parcel of investing and the price you pay for the higher returns that investments have historically delivered. There may be significant volatility in the near term but investors with a longer-term horizon should hold their nerve and batten down the hatches.”

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Adrian Kidd, chartered wealth manager at EQ Financial Planning, offered similar advice. He said: “The challenge for investors is to hold their nerve rather than make rapid adjustments to their portfolios. Over time, history shows equities will bounce back so sitting tight is the best course of action, as hard as it may feel to do so.”

Gold prices have leapt more than 3% today as investors looked for safe havens. The price of gold surged to £1,445 – its highest level since September 2020 – taking its gains this week to nearly 5%.

Petrol prices to rise

War between Russia and Ukraine is likely to mean Brits will have to pay more for their petrol and diesel. World oil prices soared above $100 to $102.30 a barrel at one point today, the highest level for more than seven years.

The price of both petrol and diesel is linked to Brent crude oil and Russia is the second biggest exporter of crude oil in the world.

Average fuel prices in the UK are already at record highs, and the situation is expected to worsen as retailers pass on further rises in wholesale costs.

Higher living costs

The UK is already experiencing the highest inflation rate for 30 years, and the Ukraine conflict is likely to make things even worse.

Jason Hollands, managing director of Bestinvest, says: “Russia is the second largest gas producer globally and a major oil supplier. A key risk of the crisis therefore is that it will add to the inflationary pressures that have been building over recent months, and keep inflation at higher levels for longer than expected.

“There is now a real possibility that the Bank of England’s forecast CPI inflation peak of 7.25% in April will be exceeded, and inflation at those levels will be totally unprecedented for many of today’s investors. That will in turn put pressure on central banks to raise interest rates more aggressively. High inflation and rising borrowing costs have implications for household finances and consumer spending, but also for business costs and for investment markets.”

The conflict could also mean more energy bill price hikes as the normal flow of gas could be affected by the war. Ofgem has already announced a 54% rise in the energy price cap to a maximum of £1,971 from April.