Cost of living and the economy
High prices, a war bill of about NIS 350 billion, a contested budget, and who works and who serves: what the economy means in the 2026 election.
- Free markets, a smaller stateLikudYisrael Beiteinu30.3
- Lower living costs, narrow gapsReligious Zionism–ZehutB'YachadYashar!The DemocratsReservists–Economic50.4
- Reward those who servePeople of IsraelBlue and White4.2
- Budgets for the communities it servesShasUTJJoint ListRa'am27.7
These priorities can coexist, so they are not ordered. Seats are the current polling average; the tick is 61. Each list's own words and sources.
Facts checked October 5, 2026. Every number shows its source and date.
What is at stake
Prices in Israel are rising slowly, but they are high. Inflation was 1.9% year on year in May 2026 (Moody's via Ynet, July 2026), after 2.6% in 2025 (Bank of Israel Annual Report 2025). But food and non-alcoholic drink cost 52% more than the average across 38 OECD countries, second only to South Korea, with dairy, eggs and meat each 64% above the average (OECD data via Times of Israel, July 2024). That comparison is the most recent found, and it is more than two years old.
Housing is moving in two directions. Home prices fell 1.5% in the year to May–June 2026, and prices had declined in eight of the previous 12 months, according to Central Bureau of Statistics (CBS) data (CBS via Times of Israel, September 2026). Rents rose. In the CBS release for April–May 2026, rent for new tenants was up 6.6% on a year earlier and for renewing tenants 2.6% (CBS via Jerusalem Post, July 2026).
The war has also left a bill. The Bank of Israel puts war-related costs for 2023–2026 at about NIS 350 billion. Public debt rose from 60.5% of GDP in early 2023 to 68.5% at the end of 2025, and the 2025 deficit was 4.7% of GDP (Jerusalem Post, October 2026). Moody's cut Israel's rating by two notches to Baa1 in September 2024 and raised its outlook to stable in February 2026 (Times of Israel, February 2026), then kept the rating unchanged in July (Ynet, July 2026). S&P affirmed an A rating with a stable outlook in May (Ynet, May 2026). Fitch rates Israel A with a negative outlook. In March 2026 Fitch warned that rising public debt and prolonged military activity could derail growth and deficit reduction, and said Israel's "fractious domestic politics" could hinder fiscal consolidation (Reuters via KELO, March 2026).
Public debt, the government deficit and defense spending, each as a percentage of GDP.
| % of GDP | Before the war | 2025 | 2026 |
|---|---|---|---|
| Public debtJerusalem Post, citing the Bank of Israel; Moody's via Ynet, 2026 | 60.5 (early 2023) | 68.5 (end of year) | about 70 (Moody's projection, July 2026) |
| DeficitJerusalem Post; Times of Israel; Moody's via Ynet, 2026 | — | 4.7 | 4.9 (budget ceiling); 5.3 (Moody's projection) |
| Defense spendingJerusalem Post, citing the IMF, 2026 | about 4.5 | about 8 (IMF estimate) | near 6 (IMF estimate) |
Source: Jerusalem Post (citing the Bank of Israel and the IMF); Moody's via Ynet; Times of Israel, 2026. Moody's 2026 figures are from its July 2026 summary (Ynet, ynetnews.com); in February 2026 Moody's put debt at about 68% of GDP (Times of Israel), and the Bank of Israel's July forecast put 2026 debt at about 69% and the deficit at 4.9% (Jerusalem Post). Moody's deficit projection is for the central government. The 4.9% deficit ceiling is from the budget passed March 30, 2026 (Times of Israel, timesofisrael.com). The Bank of Israel puts war-related costs for 2023–2026 at about NIS 350 billion.
The 2026 budget passed the Knesset 62–55 on March 30, 2026, a day before the deadline that would have triggered automatic elections. Defense received NIS 143 billion. The government approved a 3% across-the-board cut to all ministries except Defense, and funding for Haredi (ultra-Orthodox) educational institutions rose from NIS 4.1 billion to NIS 5.17 billion. A late-night amendment adding NIS 800 million for Haredi programs passed 107–4; opposition members seemed to treat it as routine and backed it automatically (Times of Israel, March 30, 2026). The fight over coalition money for sectoral institutions, which Israelis call "coalition funds", goes back further. On March 10 the cabinet approved more than NIS 5 billion of it, including NIS 1.56 billion for Torah institutions such as yeshivas and kollels; a study by the Berl Katznelson Center think tank found that NIS 2.2 billion went to the Haredi community (Times of Israel, March 2026). Yesh Atid MK Vladimir Beliak put the total at a "record high" of NIS 6 billion (Jerusalem Post, March 22, 2026). Neither source reconciles the two figures.
Under the budget sits a question about who works. Haredi men's employment rate was 52% in 2015 and 53% in 2025, against a government target of 65% by 2030 (Labor Ministry report via Jerusalem Post, July 2026). Researchers at the Israel Democracy Institute (IDI) called it "a decade of stagnation" in the integration of Haredi men and noted that over the same period there has been "rapid growth in the number of yeshiva and kollel students," men in full-time Torah study (IDI via The Media Line, December 2025).
Share of each group in employment.
Source: Taub Center; Israel Democracy Institute; Labor Ministry (per row), 2025 data. Rows come from different sources and periods; each row names its own. Haredi men's rate was 52% in 2015 and 53.1% in 2022; the government target is 65% by 2030. IDI also gives 53% for Haredi men in 2025. Taub's term is "Arab"; its summary does not say whether these figures include Druze. Taub gives no year for the non-Haredi Jewish men's figure.
The rates in the chart come from different sources and years. Haredi women work at a far higher rate than Haredi men. Arab men's employment was 77% in early 2025, slightly below its 2023 peak of 79%, and the Taub Center expects Arab women's rate to surpass Haredi men's (Taub Center, June 2026).
The governor of the Bank of Israel told the cabinet that funding for yeshiva students, "many of whom are not part of the workforce, and do not serve in the army," harms growth:
Such budgets harm long-term growth and living standards, and their impact will increase over time
Some people are also leaving Israel. In 2025, 69,300 residents left and 19,000 returned (CBS via Ynet, December 2025). A Tax Authority study of emigrants from 2015 to 2024 found that the number leaving from the high-tech sector grew by about 150% (Jerusalem Post, August 2026). High-tech was 57% of Israeli exports in the first half of 2025 (Israel Innovation Authority, September 2025). The Tax Authority estimates a potential tax loss of about NIS 700 million for each new cohort of emigrants.
What Israelis think
Among Jewish Israelis, the economy and security are close to even as reasons for a vote. In IDI's Israeli Voice Index, fielded August 31 to September 3, 2026, 38% of Jewish respondents named "economy and the high cost of living" as the first or second factor in their vote, and 39% named foreign affairs and security (IDI, September 2026).
The economy matters more to some groups than to others. Among Jewish voters who place themselves in the Center, it ranks first, at 40.5%. On the Left, religion and state comes first (39%) and the economy second (34%). On the Right, security leads at 47%; IDI did not publish the Right's figure for the economy. Among Arab respondents the economy comes second (46%), after crime in Arab society (53.5%) (IDI, September 2026). IDI published no breakdown of this question by religiosity, so there is no published figure for Haredim.
What will have the greatest influence on your decision regarding which party to vote for in the upcoming elections? Asked twice; the figure is the share naming "economy and the high cost of living" as the first or second factor.
Source: Israel Democracy Institute, Israeli Voice Index, Aug 31–Sept 3, 2026, 605 interviewed in Hebrew and 150 in Arabic; maximum sampling error ±3.57%. Among all Jewish respondents, foreign affairs and security came first, at 39%; then economy 38%, conscription 27%, religion and state 26%, head of the party 23%. IDI did not publish the economy figure for Jewish respondents on the Right, where security leads at 47%. IDI's term is "Arab respondents" (its Arab sample). They ranked crime in Arab society first (53.5%); their option list replaced conscription with crime. Political camp is self-placement. No breakdown by religiosity was published. Before the 2022 election, 44% of all respondents named the economy and cost of living as their main factor (IDI, late July 2022, single choice, n=750), but the question and its options changed, with no conscription item, so the figures are not a series.
The survey also asked about the national mood. 61% of respondents called it poor. Among Jewish respondents that share fell from 73% a year earlier to 65.5%, and among Arab respondents from 58% to 40% (IDI, September 2026).
What the parties say
Most lists have not published a full economic platform for 2026. The table below gives each party's own words where they could be found, a news outlet's summary of them where marked, or the wording of IDI's party guide where that is the only source.
What should economic policy put first?
Free markets, a smaller state30.3 seats
Likud22.1 seats
No written 2026 platform found. IDI's guide says the opening of the Likud charter refers, alongside nationalist goals, to "support for a competitive free market with limited government involvement in the economy."
IDI party guide: Likud, Accessed Oct 2026
Yisrael Beiteinu8.2 seats
IDI's guide: the party "holds right-wing fiscal positions, and its platform attests to its commitment to encouraging private enterprise."
IDI party guide: Yisrael Beitenu, Accessed Oct 2026
Lower living costs, narrow gaps50.4 seats
Religious Zionism–Zehut5.7 seats
Party leader and Finance Minister Bezalel Smotrich said the 2026 budget "takes care of everyone and fights the cost of living."
Times of Israel, Mar 30, 2026
B'Yachad10.6 seats
"We will cut food prices by 30% within three years." The party says it will "wage all-out war to break up the food cartels."
B'Yachad website (English), Oct 2026
Yashar!21.0 seats
IDI's guide: "Developing Israel's periphery and reducing social gaps so that all Israelis enjoy equal opportunities, equal rights, and equal responsibilities."
IDI party guide: Yashar!, Accessed Oct 2026
The Democrats9.0 seats
IDI's guide, on socio-economics: "reduce the cost of living; improve social services; and rebuild the public sector."
IDI party guide: The Democrats, Accessed Oct 2026
Reservists–Economic4.1 seats
On joining forces with Yoaz Hendel, Yaron Zelekha pledged, in the Times of Israel's summary, to fight tycoons and the cost of living.
Times of Israel liveblog, Sep 6, 2026
Reward those who serve4.2 seats
People of Israel4.2 seats
Ofer Winter: "The more you serve, the more you receive." He says combat and reserve service should bring greater benefits.
Jerusalem Post, Sep 17, 2026
No economic platform found. In its answer to Ynet on the draft: "Social benefits will be given first of all to those who serve" (translated).
Ynet (Hebrew), Sep 16, 2026. On the record, because the party did not answer the questionnaire
Budgets for the communities it serves27.7 seats
Shas7.6 seats
Aryeh Deri: "It is unacceptable that a poor Haredi child would not receive the minimum support as a poor Arab child does, as demanded by the Finance Ministry." Said when Shas threatened to withhold support for the 2026 budget over food-stamp eligibility.
Times of Israel, Dec 9, 2025
UTJ7.6 seats
IDI's guide: UTJ "promotes the interests of the Haredi community in Israel in the areas of education and welfare."
IDI party guide: United Torah Judaism, Accessed Oct 2026
Joint List7.7 seats
Yousef Jabareen told the Jerusalem Post that the party would seek "action against organized crime, and increased budgets for Arab society and local authorities" (the Post's summary). No joint economic platform found.
Jerusalem Post, Sep 1, 2026
Ra'am4.8 seats
Mansour Abbas has argued that "Arab political participation should be used to address crime, housing, economic development, and other problems facing Arab society" (the Jerusalem Post's summary). No full manifesto found.
Jerusalem Post, Sep 1, 2026
No position in these sources
Otzma Yehudit7.4 seats
No detailed economic platform yet; the party says one "will be published separately." Its platform calls for opening the economy by "Jewish capitalism," cutting regulation and bureaucracy, spending defence savings on infrastructure, industry and small businesses, and more resources for weaker groups (translated).
Otzma Yehudit platform (Hebrew, undated), Accessed Oct 5, 2026
No economic platform found. Avi Maoz voted against the 2026 budget at first reading, saying it "completely ignores the Jewish identity of the State of Israel" and citing religious-national schools, the dairy sector and the cost of living (translated).
JDN, Jan 28, 2026
No published 2026 economic platform found for Otzma Yehudit or Noam (checked October 2026); their rows give what they have said, which sets no stance. Blue and White's row is from its answer on the draft, not an economic platform. Rows quoting IDI's party guide give IDI's description of the party's platform, not a 2026 campaign document.
Misreadings
"It's the economy" does not work the same way. An American reader may expect the economy to decide the vote. The IDI data show it at the top only for Center voters and Arab citizens. Many Israelis name prices as a worry and still decide their vote on security, the draft, or religion and state.
Economic positions do not sort by bloc. Within the Netanyahu bloc, the Likud charter, as IDI describes it, refers to "support for a competitive free market," while Shas threatened to withhold its budget vote until poor Haredi children received food-stamp support. Yisrael Beiteinu, in the opposition, is described by IDI as holding "right-wing fiscal positions" (IDI party guide). In Israeli politics "right" and "left" are not, mainly, economic labels.
The employment figure is tied to the draft. "53% of Haredi men work" can read like a job-training problem. In Israel it is bound up with yeshiva funding and military service. The Finance Ministry's chief economist found that non-Haredi Jewish men are 36% of all employees but 83% of those absent from work for reserve duty (Finance Ministry via Arutz Sheva, August 2026). The same figures run through the debate over the Haredi draft. See also religion and state.
"Cost of living" means price levels. With inflation under 2%, the complaint is about prices that are already high. B'Yachad, in the opposition, promises to break up food cartels; it does not target the central bank.
A strong market and strained households can both be true. Tel Aviv's benchmark index rose 52% in 2025, and a third of households spend more than they earn (Time, July 2026).