Israel War Costs: How Rising Expenses Could Sway Voters

Before the Knesset vote on October 27, 2026

Security dominates the campaign, but for many Israelis the decision at the ballot box is also driven by daily economic pressures. After three years of conflict, rising prices, shrinking incomes and a strained state budget have pushed household finances to the forefront of political debates.

A human face to the strain
Asaf Beeri, a Tel Aviv resident who used to lead tourist groups around Israel, now finds himself juggling several jobs to make ends meet. International tours have all but stopped since the fighting began, and even the visitors who do come often complain about prices. “They say the food tastes good, but everything seems expensive,” Beeri says, explaining why he eats out less, postponed plans to move or buy a car, and put travel on hold.

To supplement his income he also works as a graphic designer — an area where demand has fallen as companies trim nonessential spending. Beeri notes that many firms are choosing between paying wages and funding marketing or design projects. He also assists returning reservists, many of whom are visibly affected by the conflict and in some cases unable to return to their former careers. Those personal experiences shape his voting intentions as much as questions of security: he wants a government that can restore economic breathing room and avoid deepening social divisions.

The fiscal and business burden
The macroeconomic damage is severe. The Bank of Israel estimates that three years of war have reduced economic output by the equivalent of more than 100 billion euros. At the same time households face higher taxes: the government raised value-added tax two years ago, and additional levies and budgetary pressures have increased living costs for many families.

Firms are coping with production interruptions and staff shortages. Repeated call-ups of reservists remove experienced employees from the workplace, slowing operations across sectors. Tourism — once a major source of foreign currency and local jobs — has dwindled, affecting guides, hospitality workers and the broader service industry.

High-tech: still an engine, but strained
Israel’s high-tech export sector remains comparatively robust, but it is far from immune. Tech companies lose personnel when reservists are mobilized; research and development timetables slip; and some startups postpone launches or cut back on recruitment. The result is uncertainty for a sector that has driven much of Israel’s economic dynamism in recent decades.

Long-term risks to growth and skills
Ayal Kimhi, an economist at the Shoresh Institute in Rehovot, warns that the effects reach beyond immediate budgetary costs. To finance sustained military spending, the government has had to divert public resources, placing long-term economic growth at risk. “If the budget is strained to fund current needs, future growth may be compromised and the next generation will bear the cost,” Kimhi says.

Education interruptions are another concern. Many students have paused or abandoned studies because they were called up for reserve duty. Over time, gaps in higher education and vocational training could create shortages of qualified professionals — precisely the talent pool Israel depends on for technology, research and innovation. A tighter supply of skilled workers could limit firms’ ability to develop new products and reduce potential job creation.

Daily consequences for households
For ordinary families, the combination of higher taxes, rising prices and reduced employment opportunities has real effects: people postpone purchases, cut discretionary spending, and take on extra work. Small businesses face weaker demand and have to choose between paying wages and staying afloat. Public spending priorities have shifted toward defence, leaving less fiscal room for social programs or investments that would stimulate recovery.

The political angle
Although security remains the dominant issue in campaign messaging, the economic fallout has become a decisive factor for many voters. Individuals like Beeri weigh both immediate security concerns and the longer-term question of who can restore financial stability. Beyond economics, he and others express a desire for leadership that heals social rifts rather than deepening them.

What policymakers will need to address
Whichever parties form the next government, they will inherit a constrained fiscal position and a range of structural challenges: supporting businesses through staff shortages, rebuilding the tourism sector, addressing education interruptions, and restoring households’ purchasing power. Crafting policies that both secure short-term relief and protect future growth will be one of the central tasks facing Israel’s next leadership.

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Lowell Hagan

Lowell Hagan closely follows international affairs. From geopolitical conflicts to economic cooperation, he provides context to help readers better understand global dynamics. His clear, structured style gives meaning to global news.