Russia is facing an economic meltdown as the Kremlin scrambles to find funds to maintain its war machine in Ukraine. The State Duma - the lower house of the Federal Assembly - announced plans to revise the federal budget as there are currently significant discrepancies between revenue and spending. This could prompt tax increases for inviduals and businesses to stablise the economy as the deficit is predicted to soar by a shocking a 220%.

Government plans showed a proposed personal income tax increase of 180% and a corporate income tax increase of 110%. VAT is also set to shoot up by 17%, putting many small and medium-sized businesses at the risk of bankruptcy. The Russian Intelligence Service said: "Up to 30% of small and medium-sized businesses in Russia are already on the verge of bankruptcy. By the end of this year, this figure is expected to increase to 50%."

Despite this, Russian Finance Minister Anton Siluanov said "the priorities of the Russian budget remain unchanged" and "all national development goals will be met regardless of external conditions and factors".

The Foreign Intelligence Service, however, said Siluanov was downplaying the importance of oil exports on the Russian economy, which significantly lost value in the first quarter of 2025.

Russian oil at the Primorsk and Novorossiysk ports currently cost around £35 per barrel, far behind the predicted value of £52.

If the annual decline in the price of Russian oil reaches 30%, this could deal a £30 billion blow to the economy, which is effectively equal to the budget deficit for the year.

The Foreign Intelligence Service also accused Moscow of "manipulating" statistics to hide just how poorly the economy is doing, particularly in the case of inflation.

It said: "In the context of manipulating official statistics, the situation is similar with the inflation rate. The Russian government sets the figure at 7.6%, while, according to our estimates, real inflation in Russia already exceeds 20% today."

This comes after Kyrylo Shevchenko, a former Head of the National Bank of Ukraine, claimed gas bills would rise more than 76% since the full-scale invasion in February 2022.

He added that "sharp hikes" in the cost of gas, electricity and housing overall would soar 40% in three years.

He wrote on X: "With real wages stagnating and inflation rising, Russians will pay more for less - while the Kremlin pours billions into war.

"To make matters worse, Russia slashed its 2025 oil price forecast to $56/barrel - the lowest since COVID-19. Russia is burning through its future to sustain war. And of course, the people are footing the bill".