The recent approval of an increased budget by Netanyahu’s government has sparked internal discontent among settlers, who are burdened with the financial costs of this deficit. Israeli media reported that the government approved an additional $33 billion to the budget, raising the deficit ratio from 6.6% to 7.7%.
This has exacerbated economic troubles, with declining GDP growth, downgraded credit ratings by major agencies like Fitch, Moody’s, and S&P, and looming negative forecasts due to increasing military expenditures and operational costs from fronts like Lebanon, Yemen, and Iraq, compounded by the potential threat of an Iranian response.
Israeli media revealed that this increased budget could cost an average Israeli household between 15,000–30,000 shekels annually due to higher taxes, reduced services, and elevated living costs, intensifying dissatisfaction with Netanyahu’s government. Military spending, particularly on the Lebanese front, is draining $135 million monthly from Israel’s treasury, contributing to the dual blow of counter-attacks and massive defense expenditures.
Economic experts warn that settlers will bear the brunt of this burden through higher taxes on value-added, social insurance, and healthcare. This is expected to accelerate reverse migration trends, which are already causing significant strain on Israel’s economic and productive sectors. Experts also highlight the compounding effect of brain drain, with an increasing exodus of specialists from fields such as technology, medicine, and engineering.
Israeli media outlets have underscored the detrimental impact of reverse migration on technology, research, and educational institutions. They report a decline in production, innovation, and global competitiveness as companies face challenges in retaining skilled professionals. This trend has led to closures or sales of Israeli firms to foreign entities and a marked decrease in investor confidence.
Adding to the economic turmoil is the withdrawal of major foreign companies. Recently, the American health insurance giant Elevance Health, valued at $95 billion, exited Israel due to security concerns arising from rocket attacks by the Lebanese resistance targeting vital regions like Haifa. Other European and American firms have followed suit, citing similar risks.
In summary, Israel faces an escalating crisis marked by economic decline, investor flight, and severe security challenges, signaling a challenging period ahead on both economic and strategic fronts. The repercussions of its aggressive policies are now rebounding, creating an unsustainable situation that undermines its stability and power.