Russia is set to increase its defense spending by 25%, reaching an all-time high as President Vladimir Putin emphasizes his commitment to military operations in Ukraine and rising tensions with Western nations. The defense budget for 2025 is projected to hit 13.5 trillion rubles (around £109 billion), according to draft budget documents released by the Russian parliament.
This increase, which adds approximately 3 trillion rubles to this year’s budget, highlights a shift in Russia’s financial priorities. Defense and security expenditures are expected to make up nearly 40% of the total government budget, projected at 41.5 trillion rubles for 2025.
Economists describe this trend as “military Keynesianism,” marked by a significant rise in defense spending. This strategy has fueled the ongoing conflict in Ukraine and contributed to a surge in consumer spending, driving inflation higher. A prominent Russian economic outlet noted that this budgetary shift reflects the economy’s transition to a “war footing.” Even if the war in Ukraine ends soon, military funding will likely remain a top priority for the Kremlin.
MUST READ: Netanyahu’s Poll Rebound Following Hezbollah Attacks
In stark contrast, social spending is set to drop by 16%, falling from 7.7 trillion rubles this year to an estimated 6.5 trillion rubles next year, underscoring the Kremlin’s focus on military readiness over social welfare.
The rise in military investment has raised concerns among European defense planners, who worry that NATO may have underestimated Russia’s ability to sustain a prolonged military engagement. Uncertainty also looms for Ukraine regarding future support from its allies.
On Monday, Putin expressed confidence that all objectives set for Russia’s “special military operation” would be achieved. His recent speeches have shown increased assertiveness, demanding Ukraine’s unconditional surrender and advocating for the “denazification” and demilitarization of the country.
Despite this military momentum, analysts suggest that Russia’s long-term economic outlook is bleak compared to pre-invasion conditions. The Kremlin’s pivot toward China and other markets cannot fully compensate for the loss of access to Western technologies and trade.
The surge in military spending has also intensified domestic inflation, forcing the Central Bank of Russia to raise borrowing costs. As resources are heavily diverted to the military, labor shortages are becoming more acute. The unfolding consequences of this financial strategy could reshape Russia’s economic landscape for years to come.
ALSO READ: US Informed Of Israel’s Intent To Launch Ground Operation In Lebanon
