File photo: Reuters

Brussels - A top European Union official said on Monday that the worsening situation in Ukraine is hurting the Russian economy more than the economies of the EU.

Releasing the EU's 2014 and 2015 economic forecasts, acting Economic Affairs Commissioner Siim Kallas said the Russian economy had “already shown signs of decline” as a result of the tension in Ukraine.

In particular, he pointed to the capital flowing out of Russia as a direct consequence of Russia's hard line on Ukraine since it annexed the Crimean peninsula in February.

Kallas said there “is such volatility and money is running out of the country”, and added that the Russian currency had fallen substantially as a result of the crisis.

He also warned that if Russia were to disrupt gas supplies to the EU, it would mean “substantial financial losses” which would hurt a Russian economy already in recession.

However, Kallas conceded that the “worst scenario” examined by the EU is that of the Ukrainian crisis having a negative impact on growth across the 28-member bloc, which could arise should Russia impose restrictions on the movement of capital.

“That would have an impact on the European economy... certainly, the war is a costly exercise,” Kallas said, warning that EU economies with closer ties to Russia, including Finland and Cyprus, were the most vulnerable.