Russian forces shelled and bombed towns and cities in eastern and southern Ukraine on Tuesday, a day after Russia’s foreign minister said Kyiv must accept Moscow’s demands for ending the war or else suffer defeat on the battlefield.

Those demands include Ukraine recognising Russia’s conquest of a fifth of its territory. Kyiv, armed and supported by the US and its Nato allies, has vowed to recover all occupied territory.

Britain’s defence ministry said fighting was particularly intense around the strategic eastern city of Bakhmut in Donetsk province and Svatove, further north in Luhansk province.

Donetsk and Luhansk, which make up the industrial Donbas, are both claimed, along with two southern Ukrainian regions, by Russia. “Russia continues to initiate frequent small-scale assaults in these areas (of Bakhmut and Svatove), although little territory has changed hands,” the British ministry tweeted. Reuters reporters saw fires burning in a large residential building in Bakhmut.

“Our proposals for the demilitarisation and denazification of the territories controlled by the regime, the elimination of threats to Russia’s security emanating from there, including our new lands, are well known to the enemy,” TASS news agency quoted Russian foreign minister Sergei Lavrov as saying late on Monday.

“The point is simple: Fulfil them for your own good. Otherwise, the issue will be decided by the Russian army,” he said.

Finance minister Anton Siluanov said on Tuesday that Russia’s budget deficit could be wider than a planned 2 per cent of national output in 2023 as the oil price cap squeezes export income, in the clearest acknowledgement yet the cap could hit finances.