Increased military spending forces Russia to make tough decisions on funding war: UK

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Continued increases in military spending will force Russia’s government to make “difficult decisions” about how to fund the war on Ukraine, likely increasing financial pressures on Russia's economy, the UK defense ministry reported on Monday.

“Russian government spending is becoming increasingly focused on the costs of its war on Ukraine. The state’s proposed 2024 budget envisages an approximate 68 percent increase in planned defense spending compared to that allotted for 2023 – this puts defense spending for 2024 at around 6 percent of GDP,” the British ministry said in a war update.

Russian President Vladimir Putin said earlier this month that Russia’s defense and security expenditures moved up approximately twofold, from 3 percent to 6 percent of GDP.

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“We have defense spending increased, not only for defense but for security also. They have grown approximately by a factor of two. [They] were about 3 percent and now they are around 6 percent,” state news agency TASS cited Putin as saying.

He added: “At the same time, I would like to stress - I have already said that and has to repeat: we have the budget surplus over 660 billion rubles ($6.6 billion) and there will be a deficit in this year in annual terms but only 1 percent.”

In contrast to the increased military spending, education and healthcare spending will be frozen at the 2023 allocation, which amounts to a real term spending cut due to inflation, the British intelligence report stated.

Additionally, more spending will need to be allocated to fund payments and healthcare costs for the mounting numbers of wounded soldiers and the families of those killed in the conflict, the report stated. It added: “More than half of those soldiers wounded severely enough to require longer term medical care have lost limbs, with one in five requiring upper limb amputations, Deputy Labour Minister Alexei Vovchenko stated on 17 October 2023. These injured soldiers will almost certainly require lifelong healthcare.”

The UK intelligence report highlighted: “Consistently heightened military spending will highly likely contribute to inflationary pressures within Russia. Furthermore, continued increases in military spending would force the Russian government to make difficult decisions about how to fund the war, likely increasing financial pressures on Russian businesses.”

It added: “However, any substantial future reduction in military expenditure would likely remove an increasingly central driver of Russian economic activity in the face of sanctions.”

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