British intelligence explains how war in Ukraine can lead russian economy to overheat

British intelligence has reported that the continuation of a full-scale war in Ukraine could lead to the overheating of the russian economy.

This is stated in the intelligence review of the Ministry of Defence of the United Kingdom, published on X.

So, the Central Bank of russia raised its interest rate by 1% to a new base rate of 16%. This is the fifth increase since the start of the current cycle, which began in July 2023, when the base rate was set at 6.5%. It is noted that this increase was lower than previous ones.

Russian inflation reportedly continued to accelerate at the end of 2023, rising to 7.5% year-on-year in November, up from 6.7% in October. In general, according to estimates of the russian state statistics, inflation for 2023 will be 7.4%, which is almost twice the target of the Central Bank.

The review emphasizes that the continuation of the russian invasion of Ukraine is likely to negatively affect the prospects of the russian economy. Imports are growing faster than exports, which probably contributed to the depreciation of the ruble since the beginning of the war, which is most likely the driver of inflation.

"As Russia ramps up its defence spending at the cost of other areas, the risk of the Russian economy overheating remains likely," the agency adds.

As Ukrainian News Agency earlier reported, the dictator vladimir putin, accused of war crimes, approved the state budget of russia for the next three years. In 2024, the aggressor country will spend 70% more on military spending than this year.