Tel Aviv, Israel – As 2026 began, Israelis started to feel the escalating economic cost of the Gaza war firsthand. This came after the government approved sweeping increases in electricity, water, taxes, and basic services. These measures were an attempt to address the growing budget deficit.
Economic reports indicate that massive military spending, coupled with declining investment and tourism, has forced the government to shift a significant portion of the financial burden onto citizens. This has resulted in rising living costs and a decline in household purchasing power.
Experts have warned that continued financial pressures could lead to a wave of social unrest. The warning comes particularly in light of slowing growth and rising borrowing costs. They also emphasized that the Israeli economy enters 2026 facing one of its most difficult periods in years.
These increases reflect the far-reaching impact of the war. These repercussions were not limited to the military fronts, but extended to the details of Israelis’ daily lives.
