The Telegraph: Putin Announced Cuts In Military Spending Due To Falling Economy

• 28.06.2025, 20:32

The Russian Federation is on the verge of recession.

Kremlin chief Putin yesterday announced plans to cut military spending after officials warned that Russia is "on the verge of recession," RBC-Ukraine reported, citing The Telegraph.

Putin said that Russia will cut defense spending "next year" or "within the next three years" (he did not name the exact year).

His comments came after Russian Economic Development Minister Maksim Reshetnikov said last week that the country is "on the verge of recession" (economic slowdown).

Russian Central Bank chief Elvira Nabiullina also warned that the country's wartime economic growth - driven by huge spending by the state's revolving sector - is gradually coming to naught.

- We have to realize that many of these resources are really exhausted," she said.

The publication notes that inflation in Russia has been largely driven by sanctions, which have driven up the cost of imports.

In addition, the country has a shortage of workers. In particular, wage growth has jumped to a 16-year high due to a shortage of labor caused by its transfer to the defense sector and the army.

The Higher School of Economics (Moscow) estimates the shortage of workers at the end of 2024 at 2.6 million.

Private industries have suffered from lower demand, rising costs and large debt obligations due to high interest rates.

According to Bloomberg News, Russian banking officials have privately warned that there is a risk of a crisis next year due to a growing number of businesses unable to repay loans.

The publication also writes that future spending could include spending to reintegrate "veterans" of the war in Ukraine. Reportedly, at the moment, of the nearly 140,000 Russian soldiers who have returned to civilian life - remain unemployed.