Alexander Kolyandr

Russia's ruble is in trouble. The currency has plunged to its lowest rate against the dollar since the weeks after the outbreak of war against Ukraine. On Wednesday, the ruble hit 110 against the dollar for the first time since 16 March 2022. The currency has recovered slightly, to 108 against the dollar this morning, but in Moscow people are worried. There are no good remedies for the Russian economy’s malaise apart from ending the war Russians who lived through the tumultuous years after the collapse of the Soviet Union know all about the dangers of currency devaluation. While, clearly, things aren't as bad as they were in the 1990s, the long memories of this period haunt Russians.

The Central Bank of Russia raised its benchmark rate to a twenty-year high of 21 per cent on Friday – and has indicated that it could go even higher. Even Vladimir Putin, a notorious serial boaster, won’t be caught bragging about this tell-tale sign of a not-so-healthy economy. The writing is on the wall: Russia is getting closer to stagflation – a no-growth, high-inflation economy.  An interest rate this high is unprecedented. In February 2003, still fresh in his job, Putin launched reforms to kick-start the Russian economy after the 1998 financial meltdown; the central bank brought its refinancing rate to 20 per cent and has kept it below that level ever since – until now.

Russia’s spending on its war in Ukraine continues to grow. Somehow, despite tightening sanctions and increased global isolation, two-and-a-half-years in to the conflict, it appears Moscow can continue to splash the cash on its army – for now. Spending on president Vladimir Putin's military is set to increase by more than a quarter to 13.3 trillion roubles (£107 billion) next year, according to a draft of the Russian state budget for 2025 revealed this week. This colossal sum – which is nearly double the 6.4 trillion roubles (£52 billion) spent last year – is roughly twice the size of the amount spent by Britain on its own defence. Russia's government had planned to implement a steady reduction in defence bills across 2025 and 2026.

The leaders of the European Union can give themselves a pat on the back. They have, on the face of it, delivered on a promise made following Vladimir Putin's invasion of Ukraine to end the export of European goods, machinery and parts critical to Russia's war effort. Yet things are not quite as straightforward as they seem. Exports from the bloc to Russia in June plummeted to a mere €2.4 billion (£2 billion) – a third of the €7.5 billion (£6.3 billion) shipped during the last peacetime June of 2021 before the war, according to data from the EU's statistical body Eurostat. The figure for June this year is the lowest since January 2003 and just a notch higher than the absolute minimum of January 2002 when Russia’s ascent to wealth had only just started.