Kirill is packing the last bottles of champagne into a box, there is almost nothing left in his cafe. After six years in one of the most expensive districts of Moscow, he is now forced to close his establishment, and more than a dozen others in the neighborhood have also gone bankrupt, ARD writes in a report from the Russian capital.
Kirill says that most of his customers were young people - mainly from artistic circles, to whom he offered food and drinks at moderate prices, although this was becoming increasingly difficult due to the rise in the price of wine, cheese and other Western products due to sanctions against Russia. "All other prices are constantly rising, as are labor costs, and now the new owner has asked for a four-fold increase in rent", Kiril told the German media.
Taxes are increasing, but incomes are not growing
"2026 is a very bad year for small businesses", Natalya Subarevich, an expert in economic geography, told ARD. She recalls that new laws came into force at the beginning of this year: the value-added tax (VAT) in Russia was increased from 20 to 22 percent, and additional fees were also introduced for small businesses. "This is a big problem, because taxes are increasing, but demand is stagnant, and people's incomes are almost not growing at all," says Subarevich. Kremlin boss Vladimir Putin needs funds for the war, ARD notes.
According to data from the Russian economic newspaper “Kommersant“ this year will be very difficult, especially for the restaurant industry – something that Kirill and his colleagues in the luxurious Moscow district have already felt. But not everywhere in the country people are suffering from the bad economic situation, says Subarevich. According to her, the Russian economy is currently divided into two parts: “For people who work in the civilian economy, things are going badly. And those who work in the military economy are living well“.
On the other hand, Russian regions are suffering from a significant budget deficit. They pay high amounts for soldiers who have signed contracts. “In 2025, as many as 70 regions ended the year with a budget deficit – in some places up to 25 percent, which is a lot," she points out.
"Towards a stable future"?
This year's International Economic Forum in St. Petersburg is being held under the motto: “Pragmatic Dialogue: The Path to a Stable Future“. Russia boasts that it is attended by representatives from over 130 countries: “The forum comes at a very important moment, when the policy of the globalists has suffered a complete defeat,“ says Kirill Dmitriev, economic advisor to Vladimir Putin and at the same time one of the Kremlin's most important propagandists.
But so far, the economic forum itself has suffered the heaviest blow. Shortly before it began, Ukrainian drones struck energy and military facilities around St. Petersburg. Numerous videos of the consequences of these attacks could be seen on social networks, while state television channels hardly showed this footage. The Kremlin often tries to keep quiet about the damage to Russia's energy infrastructure, instead focusing on civilian casualties after successful Ukrainian attacks, writes ARD.
Ukrainian drone attacks are having an effect
However, these attacks directly affect the state budget, says Russian economist Igor Lipsits. He is one of the founders of the Higher School of Economics, a prestigious university in Moscow. In Russia, he was declared a foreign agent and is currently living in exile.
“The more Russian refineries hit by Ukrainian drones are repaired, the smaller the profits of Russian oil companies and the less money goes into the budget in taxes,“ he explains. Russia's budget is suffering quite serious financial losses as a result of the Ukrainian attacks.
Feeling of insecurity
The war is apparently already being felt by Russians. "Economic insecurity and the war are worrying many people in Russia", Andrei - a Russian scientist and entrepreneur - told ARD. "On television they say that the military actions and the special operation will be stopped at any moment. And then they postpone it indefinitely."
And this is not just Andrei's feeling - sociological surveys in Russia confirm this picture. When asked what the most pressing problems in Russia that worry people are, respondents put inflation in first place. In second place - the ongoing special operation, and in third - corruption, says Denis Volkov of the independent public opinion research institute “Levada Center“, which is also declared a foreign agent in Russia.
The former owner of a restaurant, Kiril, is packing up the last things in the premises before closing it for good. He too feels a sense of uncertainty and has not yet decided what he will do next. According to him, people in Russia are prone to a certain fatalism: “Whatever is meant to happen, will happen”, he tells ARD.
Author: Zilke Dietrich ARD