the headlines: at least 50 people are now known to have died due to the severe arctic freeze that continues to affect the us and canada. one of the worst—hit areas is buffalo in new york state, where the governor called the storm an "epic, once—in—a—lifetime event". russia says at least three technical staff have been killed by falling debris following a ukrainian drone attack on an air force base. the russian defence ministry says the engels base, in the southern saratov region, was targetted by ukrainian drones during the night. two people are being questioned in connection with the shooting dead of a woman at a pub on merseyside in northern england on christmas eve. the victim has been named as 26—year—old ellie edwards. a 30—year—old man and a 19—year—old woman

have been arrested. now on bbc news, talking business. hello, everybody. a very warm welcome to talking business weekly with me, aaron hazelhurst. let's go take a look at what's on the show. the year the global economy became a battleground for ukraine. can russia stay afloat as sanctions continue to pound the economy? russia's economic output is thought to have dropped by around 4% this year. but instead of a short, sharp shock, is this more of a steady decline to the kremlin�*s coffers? we'll be getting the view from our man in moscow. there he is, steve rosenberg. and i'll also be discussing all of this with a sanctions specialist. there she is, agathe demarais from the economist intelligence unit. also on the show, it's all about your people from taking on coca cola

to flying on board your own spaceship. i'm going to be getting the lowdown from self—proclaimed trouble maker and global business magnate sir richard branson. wherever you'rejoining me from around the world. once again, a big hello and a warm welcome to the show. this was a year when the world economy went to war as russia's military invaded ukraine, bringing death and destruction and misery in its wake, the western allies responded notjust with military assistance, but by turning the power of their economies to isolate russia as much as possible. here's the us president joe biden back in april of this year. there's nothing less happening

than major war crimes. responsible nations have to come together to hold these perpetrators accountable and together with our allies and our partners, we're going to keep raising the economic costs and ratchet up the pain for putin and further increase russia's economic isolation. even in september, the president of the european commission, ursula von der leyen, was restating her commitment to the sanctions. this is not only a war unleashed by russia against ukraine. this is also war on our energy. it's a war on our economy. it's a war on our values. it is a war on our future. and i want to make it very clear. the sanctions are here to stay. this is time for us for resolve and not for appeasement. the sanctions there have been vast hitting banks and individuals isolating

russian businesses from the swift payment system, which is a key component of the global payment system. others include cutting off the supply of technology and parts necessary for manufacturing and a slow withdrawal of russia's main export, oil and natural gas, from europe and the united states. but the whole world is not united against russia. key economies like india and china and many states in the gulf have kept russia afloat. the leaders of those countries seemingly happy to be photographed with the russian leader and to keep the flow of oil, gas and goods running between their nations. so what does it felt like on the ground in russia? steve rosenberg is the bbc�*s russia editor. after vladimir putin ordered the invasion of ukraine back in february, russia was hit by a tidal wave of international sanctions. now, at the time, i remember that there were lots of economists predicting that come the winter, the russian economy would, like the moscow river now,

creeze over, creak to a halt. but it hasn't. oil and gas revenues kept things flowing, kind of. yes, there are major economic problems. there is economic pain here, but the wheels haven't come off the economy yet. so, for example, if you visit a supermarket in moscow, you won't see empty shelves. the shelves are full. true. a lot of the goods that used to be available there, like american cola, have disappeared as international brands have left the russian market. but in some cases there are local replacements. one thing i've noticed in electronics stores is that most of the smartphones, the tablets, things like that now come from china. now, in short supply and super expensive are spare parts for a lot of the western goods, which are no longer freely available here, like washing machines and cars and photocopiers, things like that. and this sanctions related supply problem actually affects whole industries in russia, like the aviation industry. but the problem isn't

just sanctions. hundreds of thousands of russian citizens have been draughted into the army. hundreds of thousands more have fled the country. a brain drain. and this has economic consequences for russia. living standards are falling. so far, though, there's no widespread social unrest. but i want to tell you what a man told me in a town about 200 miles from moscow. he told me this. under communism, we never used to have much anyway. russians are used to problems, he said. we'll get through this. so where is this left russia's economy as we end 2022? overall, its economy went from growing before the war to increasingly shrinking since the invasion, and the predictions are for the economy to continue to shrink next year. though by how much? that's the subject of debate. one seeming positive is its current account. that's the difference between the amount of exports and imports. and it's doubled to $225 billion between january

and november as the goods russia was able to buy or import dried up. but countries were still buying its oil and gas. so how will the sanctions play out as we come up to the start of 2023? well, i caught up with the global forecasting director at the economist intelligence unit and the author of a new book about us sanctions called backfire. agata demarais, a real pleasure having you on the show. and agata, let's start with this. let's go back to well, earlier this year and perhaps for the uninitiated, can you explain what the original, the main aims of these sanctions were? i would say there are three main objectives for sanctions. the first one is to send a diplomatic message of unity and resolve to russia. and i think that this came out very, very clearly from western countries. they're standing with ukraine and imposing sanctions on russia with a lot of unity and cohesion. the second objective is to weigh on russia's ability to wage war in ukraine, both from the economic

perspective, the russian economy is in recession, but also from a technological perspective by restricting russia's access to some critical technological components that are found in missiles, for instance. and finally, the third objective is a slow asphyxiation of the russian economy. but if we look at the picture, agathe, i mean, the russian economy, it's shrinking. but with much of the fastest growing economies in the world still trading with russia, i mean, are the sanctions really biting? they are very much biting when one takes a look at the situation of the russian economy. when we take a look at the latest data that we have and these are for october, we see that russia's gdp, the size of the economic pie, is more than 4% lower than it was when. a year ago, retail sales, that is to say what households consume has shrunk by io%. investment has dropped off a cliff. and automotive production, the production of cars, which is usually the canary in the coal mine, it has registered a 64%

decline year on year. and this is very telling, because it usually says things about the state of the economy, of household confidence, and also about the access to spare parts. so the russian economy isn't doing well. and what is really striking is that it will register a recession this year in 2022, but also next year. and that is very significant. butjust very briefly on that, i mean, the critics will say, you know, russia's got a very healthy current account surplus and they will point to that by and say, you know, the sanctions aren't really working. i'm glad you asked because this is a very good example of bad economics. essentially, you can't have an idea of the state of an economy by looking at the current account or the trade surplus. usually the argument is twofold that the russian rouble is doing very well, and it's true that it has recouped its losses from the first days and weeks of the russian invasion of ukraine. but what this shows

is that there are capital controls in russia, so it's very hard to sell the rouble. and that means that the exchange rate of the rouble is completely artificial. and as you said, the second part of the argument is usually that russia's trade surplus has ballooned in 2022. this is absolutely true. but what it reflects is shrinking imports. and this is due to the fall in household consumption. actually, the last time that the us recorded a trade surplus with the us economy was in a recession. so one probably shouldn'tjudge of the state of an economy by looking at trade data. have these sanctions effectively enforced a global economic divide between the western allies of the us and europe and well, most of the rest of the world? yes, absolutely. i would say that this fragmentation of the global geopolitical, economic and financial scene had started before russia's invasion of ukraine. but the invasion of ukraine has accelerated this phenomenon. and now we are seeing three blocks.

the first bloc is very well defined. it's western countries, the us, the eu, the uk, australia, canada. then there is a second bloc, russia, china, iran and other countries that are supporting russia's invasion of ukraine. but then there is a third bloc and it is developing countries, emerging countries. and i would say that the battle will be fought to essentially win hearts and minds in these countries. and so the real question of tomorrow will be where will these emerging countries side? who will be, who will they be supporting? that's a key question for western countries to answer to ensure that the diplomatic battles of tomorrow can be won. and while the west, agathe, has imposed sanctions, we know president putin has also played with oil and gas. i'm just wondering, what are the implications of some of the oil and gas politics that we've seen playing out this year? well, essentially, the main major implication when one takes a look at the global picture is that russia has really accelerated its demise as a global energy superpower. it has shot itself in the foot.

it has illustrated itself as an unreliable supplier of gas by turning off the gas tap to europe. and this is certainly something that china will keep in mind if china were to increase gas supplies from russia. and also it has really accelerated the demise of the russian energy sector because now there are sanctions that are going to make it very difficult for russia to build new energy fields, for instance, in the arctic. these require topnotch western technology. these require a lot of financing and western sanctions are going to make that impossible. and, agathe, let me end on this. and just briefly, do you think these sanctions can force will force putin to talk peace? no. sanctions are only part of a broader diplomatic package. i think it was very clearfrom the beginning of the invasion of ukraine that sanctions are not going to provoke regime change in moscow. we know that sanctions never achieved this.

we've seen this in cuba. we've seen this in north korea. we've seen this in syria. well, on that point, agathe demarais, a real pleasure having you on the show. thank you for your time. and i'll talk to you in the new year. thank you so much for having me. now to one of the world's most well known brands, the virgin group. they have theirfingers in so many pies. you may be watching this through one of their internet links while working out in one of their gyms or waiting to board one of theirflights. they've taken on the likes of coca cola and are currently reaching for the stars, but they've also been particularly badly hit by the turbulence of the last few years. so how do you survive and thrive in such conditions? well, i caught up with the man himself, sir richard branson. a real pleasure having you on the show, and i appreciate your time. and, richard, let's start with this, because in this week's show, we're looking at the russian economy and willie walsh, who you'll know very well, the big boss of iata, the association

that represents nearly all of the world's major airlines, and the former boss of british airways, he recently said that the west should look to reopen russian airspace to help the industry. would you agree with that? i would say that it's either got to be closed to all airlines or it's got to be open to all airlines. at the moment, you've got many airlines flying over it to the uk, saving themselves a couple of hours journey, whereas british airlines do not fly over russia. my preference would be that all airlines should not be allowed to fly over russia. we should continue the squeeze, the squeeze on russia. but i think it should be all or nothing. well, just briefly on that point. well, virgin atlantic, it doesn't fly to russia, as we know, but you do operate from airports like dubai, which does accept flights to and from russia. is there anything you and the industry should be doing to perhaps introduce

secondary sanctions? i think sanctions should be up to the government and then industry should abide by whatever governments say. and as much as possible, government should work together on a global basis to bring in sanctions. and there shouldn't be sanctions in some countries and not in others. richard, you visited ukraine back injune. can i ask you, what was the purpose of that visit? to see if we could help. i was invited by president zelensky. i spent a couple of hours with his foreign minister over lunch and then spent a couple of hours with president zelensky. and he gave a long list of things that he wanted help on, or they gave a long list of things they want to help on. and as an entrepreneur, who is known around the world, i can say pick up the phone to the head of nato when i get back and have a you know, and give him a viewpoint from my trip or so i have that advantage of being able to get

through to people. and so i think where entrepreneurs can help on situations around the world, they should do so. richard, the pandemic was obviously, as we know, a hammer blow to the airline industry. and i'm just wondering, do you think the industry in some ways shot itself in the foot by by letting go so many of its key talent? because as we all know we've seen airlines and airports struggling to meet the huge demand when that demand returned, because they simply didn't have the staff in place. i think some airlines and some airports made a mistake. i'm pleased to say that virgin atlantic has not had problems either attracting people, and we have a full contingency of staff and they're doing absolutely fantastic. but airports in particular, we've found, have been frustrating.

and i mean, more recently, they seem to have been getting on top of it, but it has taken them a while. sorry, but are you saying virgin atlantic didn't let go any of its staff or are you saying you're back to 2019 levels? yeah, no, no airline could get through it without letting go some staff. but virgin atlantic staff came back very quickly and we didn't have any of the problems of shortage on flights which was fantastic. i think from our management's point of view and from the team's point of view, people like working for virgin atlantic, and we never have a shortage of people applying forjobs. richard, what's the worst investment you've made? i think taking on coca—cola was tough. they had bigger guns than us and they managed to crush us. and we had a lot of fun in the process. british airways, on the other hand, when they tried to crush

virgin atlantic, they failed because and because i think virgin atlantic was a better airline with coke. you just got two cans of cola. they can they could use their might to crush us. richard, the industries you operate in, airline, hotels, cruises have been some of the hardest hit by the pandemic. and at one point you spoke about the possibility of taking a mortgage out on your private caribbean island called necker island, which is where you're joining me from today. did that happen? i borrowed borrowed against my home on a number of occasions. i'm pretty sure that i'd be borrowing against it again. now i slip a piece of paper to my wife and say, just sign here, darling. don't worry. because i see the protection of enormous amounts of people who work for virgin as the number one priority.

and during covid, every single one of our virgin businesses was people businesses, like fitness clubs and hotels and holidays and airlines and cruise companies and so on. so everyone was closed and we had to scurry around and sell what assets we had or mortgage what assets we had to get through it. and the wonderful thing is that the great team at virgin did get through it. virgin atlantic, which i'm really, really proud of and proud of all the team there, i mean, 38 years ago, we started with one plane. it is going as strong as ever and the other virgin companies are now back and doing great again. so it was worth going through that that pain. and i suspect the companies that are stronger for it. butjust on that point, richard, i mean, i'mjust

wondering from your perspective, how daunting is it to to come close to having to risk losing control of something you just love so much? i've done it on on occasions through my life. if you're a true entrepreneur, you have to accept that sometimes you're going to put pretty well everything on the line. i mean, you shouldn't, but if you believe passionately in what you're doing, i think most true entrepreneurs do that. i mean, if somebody ever said to me, your cruise line is going to be your cruise ships going to be mothballed for two years, your airlines in australia and europe are going to be grounded for two years. your hotels are all going to be closed. your fitness clubs are all going to be closed. your holiday company is going to, etc, etc. i honestly could not really envision how we would have survived, but we have the best team of people working for virgin in the world and somehow they pulled it off. in your book finding my virginity, you say, richard, that you believed brexit would be and i quote

here, "a catastrophe for both british "and european people." here, "a catastrophe for both british and european people." now, now that we're nearly, what, three years in, do you think you were right? and if so, why? yeah. i've never made any secret of my views on brexit before or after the referendum, and i think the uk should do everything it can to seek a mutually beneficial relationship with the eu. it's the world's biggest trading bloc. they should do something similar maybe to the switzerland deal. and the last thing britain needs is more trade barriers and more red tape, which is what it's got. and it's also, i suspect, suffering something like a 2% drop in gdp at a time where it just can't afford it. so i don't think even people who voted for brexit can really see anything that they've gained from voting for brexit. there's been no no obvious gains. there's been a lot of pain. just on that point, i mean,

you mentioned red tape and barriers, because i wanted to ask you, what do you think have been the most profound and perhaps possibly the most unexpected consequences? to he honest, i don't think there was a lot of unexpected consequences. i think the consequences that have happened have been, i'm afraid, what people who warned against it forecast. you know, i mean, ithink brexiteers, for instance, are now realising that they're having to queue in long queues going into europe. and that's frustrating for them. but they did vote for that. you know, people who want to go and buy a house or live in greece or spain or portugal are now running into problems with that. people who find it frustrating the nhs with numbers of staff that most likely is a direct consequence of brexit. so, you know, but if you ask somebody what they see that they've gained from

it, they're ready. i can't think of anything that that has been its been been a great gain. let me end on this, richard. i mean, looking ahead to 2023, what are your predictions for what the world is going to look like? do you, like many of us, believe it's only going to get worse before it gets better? so i think to end on a slightly more optimistic note, i'm 72 now, and in the seven decades that i've been alive, the world has got better in pretty well every every every area, i mean, by and large, less wars, by and large, less famine, more people being educated, less young women being being married off, you know, far too young, more people coming out of poverty. so it has by and large, been very positive. and the last year, i'm afraid, because of the selfishness

of one man, putin, we have been plunged into some darkness. unbelievable the way that ukrainians have rallied. and we just have to hope that that that conflict comes to an end within the next few months. i think once it has come to an end and wars inevitably always do come to an end, then i think the world can get back on track for the next seven decades of getting getting on top of the final the final big problems in this world, obviously, the biggest being the environmental challenge. and that's the one that really needs to be tackled, whether it's species disappearing or climate change. and we need we need nations to pull together just to. .. yeah, to get get the next seven decades on track. but, richard, for a man that runs all of these companies,

i mean, if we look at 2023 where we've got soaring inflation, which has resulted in higher interest rates, i mean, higher costs of borrowing, soaring energy prices, a cost of living crisis. how does that concern you as we look towards 2023? well, i started out in business as a teenager. inflation was something like i7%, interest rates were 22%. and we had to somehow cope. and, yeah, we did. so, you know, so challenges are thrown at us all, all the time. and i think that the world will get through this. and hopefully, as a result of high high fuel prices we'll use less fuel, hopefully will move moved more towards clean energy. hopefully we can turn a big negative into a positive. well, on that positive note,

sir richard branson, the founder of the virgin group, my friend, i really appreciate your time. thanks forjoining me. merry christmas, richard, to you and your family. and i'll check in with you soon. yes. thanks a lot. well, that's it for this week's show. i hope you enjoyed it. don't forget, you can keep up with the latest on our global economy on the bbc website or the smartphone app. of course, you can also follow me on twitter, tweet me, i'll tweet you back. thanks for watching. and a very merry christmas to you all. i'll see you in the new year. bye bye.

hello. mild and returning on tuesday. some snow in the north of the uk. ice across northern england and scotland first thing. some snow over the highest ground of northern england, southern scotland. here likely to stick around longer. very wet for wales and the south—west of england. windy in southern parts. i moulded a for many. tuesday night. rain southwards and eastwards. —— a milder day for many. it's days mild as we had through wednesday. — — it stays mild.

welcome to bbc news, i'm lucy grey. our top stories: the severe winter deep freeze continues in the united states and canada — at least 50 people have died. moscow says at least three of its personnel are killed in a ukrainian drone attack on a russian air force base. two people arrested after a woman is shot dead at a pub in merseyside in northern england on christmas eve. the head of the un in afghanistan asks the taliban to allow afghan women to work for humanitarian agencies. and stepping up security head of the inauguration of brazil's president—elect lula de silva — after a foiled bomb attack.