The stunning collapse in oil and commodity prices isn’t just hammering mining and energy companies — it’s hitting luxury firms too.
The Guardian reported that 450 staff at Fairline Boats, a luxury yacht maker, have been made redundant after the company went into administration last week.
According to the Guardian: “At the end of March, the boat maker was still valued at £13.5 million ($19 million), but it has been hit by a slump in orders from wealthy Russians who have been affected by a deepening recession, falling commodity prices and a weak rouble.”
The boats range in price “from £350,000 to £2.5 million” according to the report, but with the collapse of the ruble in the past year, they will have become comparably much more expensive for Russian buyers.
Here’s what’s happened to the Russian currency in the wake of economic sanctions and an oil price collapse:
And things aren’t likely to get much better in the near future.
Alexei Kudrin, who was Russia’s finance minister from 2000 to 2011, warned on Tuesday that within the next few years, Russia’s “reserve funds will be exhausted and they will have to raise taxes.”
“The main thing is we should change the economic structure,” said Kudrin. “What we’re seeing is that the current growth potential is quite low.”
Russia is suffering from both high inflation, at about 15%, and double-digit interest rates, making private financing for business difficult.