Downing Street said the Prime Minister spoke to Ukraine's President Volodymyr Zelenskyy and France's President Emmanuel Macron on 1 December, focusing on long-term security and a just peace for Ukraine. The Prime Minister also briefed them on recent talks, including with the NATO Secretary General. Crucially for markets, the leaders discussed using the value of immobilised Russian sovereign assets to support Ukraine's reconstruction and armed forces, and agreed to keep talks moving in the days ahead.

Immobilised assets are central bank reserves and other state holdings that Western jurisdictions have locked in place since Russia's full-scale invasion in 2022. They remain owned by Russia, cannot be transferred, and in many cases generate interest income that sits at custodians. Policymakers have been weighing whether those earnings, or the assets as collateral, can legally be routed to Ukraine without touching the principal.

The discussion aligns with G7 debates over two main routes. The first is to direct the net profits accruing on immobilised reserves into Ukraine's budget and defence support. The second is to use the assets as backing for a large syndicated loan or bond, letting partners front-load financing now and settle from future profits. Both approaches aim to respect international law on state immunity while increasing predictability of funding.

For the City, the mechanics matter. If profits are earmarked for Ukraine, UK-based custodians, clearers and banks could face new reporting, remittance and audit obligations. If a collateralised loan emerges, documentation standards, risk weights and disclosures will be examined by regulators. Either way, compliance teams should expect updated guidance from the Office of Financial Sanctions Implementation (OFSI) and prudential supervisors once leaders settle on a model.

SMEs will read this through a different lens: opportunity and risk. On the opportunity side, a clearer funding stream would support contracts in energy infrastructure, housing, transport and digital rebuild, where UK firms already partner with Ukrainian municipalities and international lenders. On the risk side, sanctions screening, export controls and end-use checks will only tighten; directors should budget time and resource for that.

None of this shifts energy prices overnight, but financing clarity can trim risk premia in Eastern Europe, with knock-ons for logistics and insurance costs. Procurement pipelines typically demand stable counterparties and predictable cashflows; a G7-backed mechanism would help both. Finance directors may wish to refresh hedge policies and credit insurance assumptions for the first half of 2026 as policy signals firm up.

The Downing Street readout referenced intensive diplomatic discussions in the coming days. That points to announcements around upcoming G7 and NATO touchpoints, with domestic steps likely to follow in the UK, from secondary legislation under sanctions law to fresh guidance for financial firms. The working assumption remains: protect the principal, mobilise value created by it, and avoid precedent that unsettles reserve-holding states.

There are risks worth watching. Moscow has threatened legal action and counter-measures; companies with any residual Russia exposure should revisit contingency plans. Some analysts also warn about perception risk to reserve currencies if the principal is seized, which is why most policymakers emphasise profits and collateral rather than outright appropriation. Expect further debate before any scheme goes live.

The takeaway for investors is practical. Focus on communique language rather than headlines: terms such as profits, collateral, loan and windfall will signal the chosen path. For UK firms, the homework is clear: tighten sanctions controls, map counterparties in the Ukraine supply chain, and stay close to UK Export Finance (UKEF) and multilateral procurement portals so bids are ready when funding gates open.