Inflation and High Interest Rates Threaten Russia’s Ability to Maintain War Spending, Says UK Intelligence

British military intelligence has claimed that soaring inflation and high interest rates threaten Russia’s ability to maintain high defence spending levels.

In its latest update on the war in Ukraine, the United Kingdom’s Ministry of Defence (MoD) suggested that Moscow may struggle to sustain its war effort due to pressures on its economy.

“Long-term inflationary pressure will highly likely exacerbate pressures on Russia’s ability to sustain high defence spending,” the MoD said in a statement.

The British intelligence dump noted that last month, the Central Bank of Russia (CBR) decided to keep interest rates at their highest level in over two decades, having climbed to 21 per cent from 8.5 per cent before the invasion of Ukraine in 2022.

The Mod claimed that the high interest rates, in conjunction with soaring government spending and labour shortages, likely indicate that inflation will remain above the CBR’s target level of four per cent throughout the rest of the year.

London also predicted that the interest rates suggest that more corporate bankruptcies will probably increase in the coming months.

The Ministry of Defence said that after the October interest rate hike, inflation in the Russian economy rose from 8.5 per cent to 10.1 per cent.

Furthermore, since the collapse of Russia’s ruble currency at the beginning of the invasion of Ukraine in 2022, when it fell to 114 per U.S. dollar, it has since rebounded to a high of 81 per USD last month.

“The appreciation of the ruble will highly likely reduce federal revenues from oil and gas, in ruble terms, increasing pressures on the federal deficit,” Britain’s MoD predicted.

The precarious state of the Russian economy may put further pressure on Vladimir Putin to negotiate an end to the conflict in Ukraine.

Kyiv and its European backers have accused the Kremlin of stalling in the ongoing peace negotiations led by U.S. President Donald Trump’s White House.

While Ukrainian President Volodymyr Zelensky claimed that his side was willing to agree to an unconditional ceasefire, Moscow demanded that international sanctions, such as those on Russia’s banking system, be lifted before any truce is agreed upon.

President Trump, for his part, has reportedly said that he is “pissed off” about the delays from Putin and warned that the U.S. may impose “secondary tariffs” on Russian oil by taxing third party countries who purchase energy from Russia. The novel strategy has already successfully discouraged others, such as China, from buying oil from the rogue socialist state.

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