The war with Iran and the renewed fighting on Israel's northern front have driven a sharp rise in defense spending, with budget demands climbing from 112 billion shekels approved in December to 144 billion shekels, and now to 177 billion shekels in closed discussions. The increase reflects the possibility of a prolonged conflict and expanded operations in Lebanon, alongside a surge in reserve mobilization that has grown to nearly 100,000 soldiers. The government estimates that each day of combat costs about 1.5 billion shekels in military expenses alone.

So far, roughly 20 billion shekels have been spent in just over two weeks of fighting, and the total cost could reach 50 billion shekels depending on the duration. Heavy use of munitions and aircraft, enabled in part by cooperation with the United States, has intensified expenditures. At the same time, civilian costs are mounting, including compensation for unpaid leave, damage to infrastructure, support for police, and payments to affected businesses.

Beyond direct military outlays, the war is straining the broader economy. Growth forecasts have been revised downward, the fiscal deficit has widened, and the debt to gross domestic product ratio is rising, increasing future interest payments. Consumer spending has dropped sharply, large numbers of reservists have been pulled from the workforce, and partial shutdowns of schools and businesses are costing billions of shekels each week, deepening the overall economic toll.