Israel heads toward economic shock - everyone will have to pay

Israel may face serious economic pressure due to rising defense spending, a shortage of soldiers, and budget commitments to the ultra-Orthodox. The defense budget has grown from 70 billion shekels in 2022 to over 140 billion, and its share of GDP has approached 7%. Possible tax increases could hit citizens' incomes.

Israel may face serious economic pressure due to the rapid increase in defense spending, a shortage of soldiers, and the preservation of significant budget commitments to the ultra-Orthodox sector. This is reported by 'Israel Hayom'. The defense budget has grown from about 70 billion shekels in 2022 to over 140 billion now, with discussions of an increase to 180 billion. The share of defense spending in GDP has approached 7% from 4%, and could reach 8.7% or over 10% if an additional 350 billion is allocated over ten years. The shortage of IDF personnel due to prolonged reserve service is removing thousands of workers from the economy. Maintaining the policy towards the ultra-Orthodox requires significant budget expenditures. Investments in transportation, healthcare, and housing are at risk. If spending continues to grow without new revenues, taxes may rise, hitting citizens' incomes and standard of living. The consequences of decisions may pass to the next government, limiting the space for addressing civilian issues.