Russian President Vladimir Putin is significantly increasing financial resources for the country’s military campaign in Ukraine, allocating approximately £154 billion for war-related spending in 2027. This figure marks a 27 percent rise compared to the previous budget of £122 billion for that year, according to official documents reviewed by Reuters. The expanded war budget forms part of a broader £450 billion defense spending plan set for the next three years.

The Kremlin is set to introduce new tax measures aimed at narrowing the growing budget deficit while funding the heightened military expenditures. These fiscal changes, expected to be presented to the State Duma on October 1, are projected to raise an additional £33 billion from Russian citizens and enterprises. Among them, a windfall tax on metals and mining firms is anticipated to contribute around £1.8 billion annually.

Putin has portrayed the results of recent parliamentary elections, widely criticized as rigged to exclude opposition figures, as public approval for continuing and intensifying military operations. The ruling United Russia party secured an unprecedented number of seats, bolstering concerns among Ukrainian and European officials, along with analysts, that the Kremlin may initiate new mobilisation efforts to reinforce its forces.

In addition, Putin signed a decree expanding the Russian military by 15,500 personnel, the fourth such increase this year following similar announcements in March, June, and late July. Ukrainian President Volodymyr Zelensky stated that Russia has already commenced mobilisation and is reportedly seeking to acquire an additional 10,000 troops from North Korea to supplement its forces.

The surge in military spending has compounded existing economic challenges in Russia. Years of elevated defense budgets have contributed to sustained inflationary pressures and labor shortages. Furthermore, persistently high interest rates have increased borrowing costs for businesses amid ongoing international sanctions. Compounding these pressures, oil and gas revenues—critical to government income—have declined. The government has revised its oil and gas revenue forecast for 2026 downward to £69 billion from an earlier estimate of £80 billion, following intensified attacks by Ukrainian drones and missiles on Russian refineries since August last year.

This budgetary strain is reflected in Russia’s fiscal outlook. State debt is expected to increase to 21.7 percent of GDP in 2027, exceeding the 20 percent threshold that authorities consider safe, up from 19.8 percent in 2026. Total government borrowing is projected to rise 43 percent, reaching £69 billion in 2027.

Despite these developments, Putin has downplayed concerns about the expanding budget deficit, noting the country maintains one of the world’s lowest government debt ratios. However, some officials have expressed caution regarding the economic risks of prioritizing military expenditure. Boris Titov, Putin’s envoy for international development, warned that overemphasis on defense spending could destabilize the broader economy, emphasizing the need for balance between military and civilian sectors.