More Russians are abandoning digital payments and turning to cash in what analysts say is one of the clearest signs yet that the economic strain of the war in Ukraine is reaching everyday life. As Ukrainian drone strikes disrupt infrastructure and wartime costs mount, Moscow is facing growing pressure to keep both its economy and public confidence intact. War Comes Closer to Home Russia's central bank has injected the equivalent of £14.8 billion into circulation since the start of 2026, marking the largest increase for this period outside the Covid-19 pandemic. The shift comes as Ukrainian drones continue targeting oil refineries and other strategic sites deep inside Russia. Authorities have repeatedly shut down mobile internet services to disrupt drone navigation, leaving many people unable to rely on digital payment systems and forcing a return to cash. Economic Cracks Begin to Show The change also reflects mounting financial pressures. Small businesses have reportedly encouraged customers to pay in cash as higher taxes bite, following January's increase in VAT from 20% to 22% and tighter rules bringing more firms into the tax system. Russia's economy was already under strain before the latest disruption. Economy Minister Maxim Reshetnikov has warned the country is close to recession, while weaker oil revenues, persistent inflation and soaring military spending continue to squeeze public finances. Ukraine's Strategy Takes Its Toll Ukraine's long-range drone campaign is increasingly targeting Russia's energy sector. Energy Intelligence estimates that nearly half of the country's 6.6 million barrels per day of refining capacity has been knocked offline since February, contributing to fuel shortages and rationing in some areas. Keir Giles, an associate fellow at Chatham House, said the return to cash may reflect a broader loss of confidence in the systems underpinning Russia's economy. He argued Ukraine's strategy of bringing the consequences of the war closer to ordinary Russians is beginning to have both practical and psychological effects. Putin Holds the Line Despite Warnings Despite growing economic pressure, there is little indication the Kremlin is preparing to change course. President Vladimir Putin has publicly dismissed warnings from economists, insisting Russia's economy remains resilient and accusing Ukraine of trying to create public anxiety through attacks on critical infrastructure. Business leaders have nevertheless voiced increasing concern over slowing growth and shrinking oil and gas revenues. Even as tax collection becomes more difficult and wartime costs rise, analysts believe far greater domestic pressure would be needed before the Kremlin considers freezing its military gains or pursuing a negotiated end to the conflict. The clearest sign yet that Russians are losing faith in Putin’s war
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