We face the real danger of becoming a senile nation

Vladimir Putin

Despite several months of solid economic growth, after years of decline, the former KGB officer will warn of the need for further painful reforms.

He will also underline the depth of Russia's demographic crisis, and accuse the media of abusing journalistic freedoms.

"Many of our companies remain uncompetitive. Many of then survive thanks only to the weak rouble, low energy tariffs, non-payments and barter," he will tell a joint session of the two houses of the Russian parliament, according to a leaked copy of the speech.

Alarming picture

"The Russian business climate remains bad, business risks are extremely high."

Vladimir Putin: Preparing Russia for more pain

Mr Putin is expected to say that the Russian government should interfere less in business, and do more to ensure a level playing field - putting an end to the "crony capitalism" of the Yeltsin years.

He will promise to abolish the "dictatorship of the shadow economy".

Leaks suggest that Mr Putin will paint an alarming picture of Russia's falling birth rate.

"If the trend continues, the survivability of the nation will come under threat... We face the real danger of becoming a senile nation," the leaked draft says.

Media 'pressure'

Mr Putin may be hoping that his frank and blunt account of the country's problems may steel Russians to make new efforts to overcome them.

Head of Media-Most Vladimir Gusinsky is under investigation

He is set to repeat his call for a "dictatorship of the law", while insisting that he does not want an authoritarian state.

However, he has more criticism of the Russian media.

"Journalistic freedom has very quickly become a tasty morsel.

"Not only for politicians but for big financial groups, it has become a convenient tool for fights between clans and for illegal pressure on the authorities," the draft says.

The comment risks exacerbating liberal fears of a threat to freedom of speech in the wake of legal action against the country's largest independent media group, Media-Most, and the growing influence of the security services in the Putin administration.