Vladimir Putin could face tough new EU sanctions which will cut off financing from Russia's banks by the end of the week , the Prime Minister's official spokesman has said. European Union ambassadors will meet in Brussels on Tuesday to discuss the new sanctions, which Downing Street admitted could cause "pain" for the City of London.
The new sanctions, which have a broad consensus across the EU, are likely to target Russian financial institutions, arms deals and energy exploration technology and could be imposed within "12-48 hours".
A Downing Street spokesman said: "We have been clear that there will be the possibility for some pain to be felt here in the UK in terms of these measures, but you have to look much more broadly at the wider crisis and the fact you have had a passenger airline shot out the skies with 298 people losing their lives."
However, the meeting is unlikely to make progress in targeting Mr Putin's "cronies" with asset freezes an travel bans. "The focus in Brussels is on agreeing the tier three measures [the tougher sanctions]," a Downing Street spokesman said.
Under the sanctions, Russian banks will be barred from listing new bond or equity issues on European Exchanges, a move which could lead to the loss of deals worth £6 billion. It is likely to have a significant impact on the City of London, however.
However, European leaders will not target oil and gas imports because of concerns about the impact it could have on EU countries reliant on Russian energy imports.
It will instead target "sensitive technologies" that could be used in deep-sea drilling, arctic exploration and shale oil extraction, business worth just £119 million.
The EU proposals also include a ban on future arms deals with Russia. Controversially, it will not address a £1 billion contract France has signed to supply two warships to Russia. David Cameron has said it would be "unthinkable" if the deal went ahead.
