Russia Is Putting Economy at Risk to Fuel Ukraine War, UK Intel Says

• Russia is putting its economy at risk to fuel its grinding war with Ukraine, UK intelligence said.
• The Russian economy “is likely at risk of overheating,” said UK’s Ministry of Defense. 
• Higher inflation could “increase the costs of funding Russia’s war in Ukraine,” the agency said.

Russia’s economy may soon be at risk of “overheating” as the government ramps up its military spending to continue to fuel the Kremlin’s grinding, nearly two-year war with Ukraine “above all else,” British intelligence said on Monday.

“Due to increasing demand, partially due to large increases in defense spending, along with continued pressures of a tightening labor market, the Russian economy is likely at risk of overheating,” the UK’s Ministry of Defense said in its latest daily intelligence update.

The UK intelligence group said that inflation in Russia climbed to 6% in September — up from 5.3% the previous month — and that the increase was driven by rises in costs of food and fuel.

“Higher inflation is almost certain to increase the costs of funding Russia’s war in Ukraine,” British intelligence said.

Inflation in Russia is “highly likely” to exceed the 4% target rate in 2024 amid soaring interest rates, according to the UK’s Ministry of Defense.

“Continued high inflation is likely to erode real terms government spending, particularly in areas such as social care with below-inflation spending rises. This further illustrates the reorientation of Russia’s economy to fuel the war above all else,” British intelligence said.