The Israeli occupation government, amid its ongoing war against Gaza and Lebanon, has approved the 2025 budget, paving the way for increased military spending and tax hikes, the American news agency, Bloomberg, reported on Friday.

The agency noted that the 2025 budget, which focuses on further military spending, reflects a profound shift in priorities since the war began more than a year ago, adding that "defense expenditure at about 6% of GDP will reflect the new priorities of Israel."

It pointed out that this level of spending is "well above the figure of 4.2% in 2022 and the OECD average of 1.7%."

Bloomberg's report further explained that "the conflicts in Gaza and against Hezbollah in Lebanon, as well as heightened tensions with Iran, have weakened Israel’s economy and finances and forced Prime Minister Benjamin Netanyahu’s government to focus on reining in the budget deficit."

It added that the deficit target for the coming year has been set at 4.3% of GDP, with military spending expected to be the largest among all ministries, totaling 117 billion shekels, which is "similar to last year’s figure but 80% higher than the pre-war plan for 2024."

Bloomberg also recalled a statement from Netanyahu before discussing the budget, in which he said, "There is no economy without limits," adding that "if you give to one area, you need to take from another." He used this as a justification for continuing to fund the war while neglecting other aspects of the Israeli economy.

'Israel' faces economic instability as capital flight surges 62%

Israeli-based daily business Calcalist recently published an in-depth analysis revealing a dramatic 62% increase in capital flight from "Israel" since October 7, 2023.

This surge in capital outflow, the report notes, has been exacerbated by the political and economic uncertainties following the formation of the extremist government led by Netanyahu, Smotrich, and Itamar Ben-Gvir.

According to the report, capital flight refers to the rapid exodus of financial assets from a country due to various risks, including political instability, social unrest, or geopolitical tensions.

In "Israel’s" case, the combination of escalating geopolitical risks, internal discord, and financial uncertainty has led investors to lose confidence in the Israeli economy and move their assets abroad.

The weakening of the Israeli shekel is one clear indicator of this phenomenon. The currency has fallen by about 10% since the new government took office and has fluctuated dramatically due to market instability.

Experts from Calcalist also highlight that the regime's net financial outflows turned negative in the second quarter of 2023, with the third quarter showing a stark net outflow of $21 billion—marking a significant shift from the surplus of $1.25 billion recorded earlier.

Read more: Paying 'Israel's' war bills may force difficult choices: AP