Arsenal boss Unai Emery will have just £40million to spend on players this summer, according to reports.
The low budget will come as a shock to Gunners fans after the club were unable to make any permanent signings in the January transfer window.
Their only arrival was the loan capture of Barcelona midfielder Denis Suarez, who could join on a permanent deal worth £18million at the end of the season.
It would leave Emery with only £22million to spend as he aims to revamp his squad.
The Mirror report Arsenal are falling into line with the Premier League’s strict spending rules on transfers and wages.
And the club would risk breaking Financial Fair Play rules if large amounts of money are spent.
Emery could be forced into selling some of his first-team players to generate cash.
Mesut Ozil, who earns around £350,000-a-week, has failed to hold down a regular starting place under Emery this season.
The playmaker has been linked with moves to Juventus and Inter Milan and his departure would free up funds.
Arsenal desperately need to strengthen a defence that has leaked 36 league goals this term, more than relegation-threatened clubs Newcastle and Crystal Palace.
Rob Holding and Hector Bellerin are sidelined with long-term injuries, which further highlights the need for more bodies.
A failure to spend in January could cost Arsenal a top-four finish as they dropped to sixth following their 3-1 defeat to Manchester City on Sunday.