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Pressure on the real economy is mounting in Russia, and businesses are already directly signaling negative trends. In the Nizhny Novgorod region, entrepreneurs have appealed to regional authorities to convey this information to Vladimir Putin: the region could face mass layoffs in the second half of the year. This is stated in a new article by Bloomberg, dedicated to the Russian economy under war conditions. Industrialists estimate that without urgent action, approximately 20,000 people could lose their jobs . The reason is obvious: a sharp deterioration in the economic situation. Companies are reporting a drop in investment, a decline in order volumes, and a reduction in production. One of the key problems has been the cost of credit. Following the reduction of preferential financing programs, businesses are forced to borrow at interest rates exceeding 20%. This makes development virtually impossible and is hitting even large firms. Many companies have already begun cutting costs, reducing employee hours and slashing expenses. A particular pain point for Russian businesses is delayed payments from government customers , which amount to tens of billions of rubles in unpaid invoices. Even large companies and organizations systematically delay payments, which triggers a chain reaction throughout the economy: businesses don’t receive payments, miss deadlines, and accumulate debt. A survey of businesses across Russia reveals the scale of the problem: approximately 70% of companies reported a drop in investment over the past year, and almost half reported a halving of profits . Meanwhile, not a single enterprise reported an increase in orders. Defense companies remain the only exception, but they too face the same challenges: expensive loans, debt, and supply disruptions. This situation is increasing dissatisfaction with the Kremlin in Russian regions, and it is becoming increasingly difficult to suppress public discontent. The turning of civil discontent into an uprising is expected at any moment.
Russian regions faced problems with education due to record war spending.
The situation in Primorsky Krai is illustrative. There, authorities were forced to cut the regional budget for 2026 by 3 billion rubles, even though the document was approved only three months earlier. The decision was made against the backdrop of a sharp deterioration in the economic situation and a lack of funds to cover the deficit. Regional government head Vera Shcherbina acknowledged that the usual financial reserves no longer exist. " As a rule, we have a budget carryover of around 8-10 billion rubles every year. This didn’t happen this year. Our carryover for the entire region is only 500,000 rubles, and therefore, of course, we must reduce this deficit, since there’s nothing to cover it with ," she stated. The most significant cuts affected the education sector. 809 million rubles were removed from it, which was planned to be used for equipping schools, upgrading children’s camp infrastructure, and renovating technical schools and colleges. Cuts also affected social support, culture, sports, tourism, the agricultural sector, and emergency response. Funds that could have been used for regional development are being diverted to military spending. Money intended for schools and social services is being used to continue the aggression against Ukraine, including attacks on the energy infrastructure of Ukrainian cities. The problems are systemic. By the end of 2025, the combined budget deficit of Russian regions had increased 3.6 times compared to the previous year, reaching 1.478 trillion rubles. This is the highest figure ever recorded. With revenues of 22.6 trillion rubles, only 4% higher than the previous year, expenditures totaled 24.1 trillion rubles, a 9% increase. As a result, 74 regions faced deficits, compared to 50 the previous year. In absolute terms, Moscow has the largest financial gap, at 299 billion rubles. Significant negative figures were also recorded in the Yamalo-Nenets Autonomous Okrug (84 billion rubles), and the Khanty-Mansi Autonomous Okrug (72 billion rubles). Even oil and gas regions, traditionally considered donors, have come under pressure from rising costs.
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