Ukraine will allocate nearly $50bn to defence and security in 2025, amounting to 26% of the country's GDP, but it’s going to need more outside help, Prime Minister Denys Shmyhal said as the annual Ukraine Recovery Conference (URC25) kicks off.

Shmyhal said the Ukrainian government had submitted amendments to the state budget law at the end of June to increase defence spending by almost $10bn.

“The total financial resource for defence and security in 2025 will amount to nearly $50bn. That is 26% of GDP,” he said speaking at the 14th meeting of the Ukraine Donor Platform’s Steering Committee, held on the sidelines of the event.

Thanks to the outgoing Biden administration and the start of payments of about $1bn a month that are part of the G7 $50bn loan to Ukraine, the country's international reserves are at a wartime high of some $45bn. The budget this year is fully funded, but according to Ministry of Finance (MinFin) estimates, next year’s international funding could halve to $19bn, as financial help from the US is expected to dry up. So far this year the US has provided Ukraine with no fresh grants or loans and the load is now being entirely borne by the EU and the G7 deal that is backed by profits from Russia’s $300bn of frozen Central Bank of Russia (CBR) reserve assets.

The prime minister noted that Ukraine’s weapons procurement budget would also reach a record-high $16.4bn, while domestic revenue for 2025 is projected at $48.5bn. “Thus external financing is critically important for us, as it allows Ukraine to allocate its own resources directed at defending our country,” Shmyhal said.

He added that MinFin was already ahead of the game on its previous estimates for international aid and has already secured $22bn in external financing this year but warned that financial needs would remain high in the longer term.

“Meanwhile, 2026 remains a challenge. Our external financing needs will stay above $40bn. The key task is to develop mechanisms and instruments that will make it possible to raise these funds,” he told the meeting of Ukraine’s allies.

Allies pledge continued support, but mood sours

The nature of the Ukraine Recovery Conference has changed dramatically since the first major meeting in June 2023, which was underpinned by a cautious mood of optimism that assumed the war could end in the near future. That was the year that the Armed Forces of Ukraine (AFU) scored a spectacular success with its summer offensive, smashing through Russian defences and retaking hundreds of square kilometres in the Donbas.

Then foreign ministers, business leaders and Ukraine’s top diplomats gathered in London to thrash out a plan to rebuild the country once the fighting ends, and more importantly, on how to fund it. The World Bank recently estimated Russia has caused $528bn worth of damage and the delegates to the 2023 conference called on the private sector to pitch in and pay for the rebuild of the country.

Since then, the mood has soured considerably. The 2024 summer offensive ended in abject failure. By waiting for almost a year to launch a second major offensive, the Armed Forces of Russia (AFR) had ample time to build extensive defences and easily repelled the Ukrainian offensive that year.

This year, the AFU is on the defensive again as Russia launches a missile war as crucial supplies of US-made air defence ammo dwindle and the Ukraine fatigue, that was already apparent in 2024, intensifies. The US already ran out of money for Ukraine at the start of last year, and this year has made almost no contributions since Trump took over in January.

And the AFU is losing ground to the AFR, slowly, at great cost in human life, but steadily. This month intelligence reports say Russia has retaken full control of the Luhansk region in the Donbas on July 1 for the first time – one of Russian President Vladimir Putin’s stated war goals.

Kellogg backs Ukraine

Trump’s special representative to Ukraine, retired Lieutenant General Keith Kellogg, also spoke at the conference, pledging America’s full support and emphasised the need for continued unity among Western allies.

“We're trying to get to a ceasefire. We got to a reasonable point with Ukraine. But Russia never follows through,” Kellogg said. “We get there with a unified alliance [NATO]. We can fight as long as necessary. We're not going to quit.”

The idea that the private sector is going to come up with the tens of billions of dollars needed to rebuild Ukraine has clearly been abandoned as unworkable and Kellogg suggested the more nebulous idea of creating a Marshall Plan to finance reconstruction instead.

Kellogg also linked current efforts to historical precedents: “Just like the Marshall Plan rebuilt Europe, we must do the same for Ukraine – and build it back better than before.” He added, “It matters deeply to the United States. And President Trump takes that personally.”

After over three years of war, hope amongst the Ukrainians themselves that their country will recover from the war are fading. A recent Kyiv International Institute of Sociology (KIIS) poll found that the share of those that saw as future with Ukraine flourishing as a prosperous EU member has fallen from a clear majority of 88% in 2022 to a minority of 43% in June 2025, with the majority (47%) now believing the economy will be ruined for generations and anyone that can leave, will.

He concluded with a direct appeal: “What Ukraine is doing today is legendary. Ask yourself: Do you want to be on the right side of history? On the moral side? That choice is yours.”

In just the last week, Trump has made his most pro-Ukraine, anti-Russia comments on his presidency to date, but he has yet to take any concrete action.

Trump’s efforts to bring the conflict to a speedy end peaked with his seven-point “final offer” peace plan in April presented in London, but that was rejected by Zelenskiy, backed by his European allies, and the ceasefire talks now appear to be dead in the water.

But, as the report from former Italian Prime Minister and ex-European Central Bank boss Mario Draghi highlighted, three decades of massive underinvestment, Europe’s defence industry is not in a position to supply Ukraine without US help, as Nato General Secretary Mark Rutte admitted in public comments last week. Despite over three years of war in its backyard, Europe remains the global defence sector laggard, Statista reported in March, as it has failed to sign defence sector procurement contracts. Belatedly the Nato summit in the Hague tried to turn things around with pledges of 5% of GDP spending, but that spending target is only expected to be reached in 2035. In the meantime, European Commission President Ursula von der Leyen admitted in her ReArm speech (video) that Russia is outproducing all of Europe and Ukraine combined. And in some areas, like real time satellite-intelligence that is vital for Ukraine’s counterattacks on Russian positions, Europe is itself completely lacking in these resources and is entirely dependent on the US.

Macron promised that European countries would “never abandon Ukraine” in its war against invading Russian forces in a speech in English, while demanding an unconditional ceasefire in Gaza.

Nevertheless, Ukraine’s allies continue to put on a brave face in the face of the dwindling US support for Ukraine. French President Emmanuel Macron and UK Prime Minister Sir Keir Starmer, who are meeting separately in London, sent video messages to the URC25 pledging unwavering support for Kyiv.

Still, the fact these two leaders of the “coalition of the willing” and amongst Ukraine’s most ardent supporters, decided to skip the URC25 and spent much of their time together discussing the migrant problem and nuclear coordination, suggests that Europe’s efforts to counter Russia’s aggression is also muted in the face of what Putin continuously calls “the realities on the ground.”