"אי בהירות בנוגע להקמת קואליציה; סבב בחירות רביעי יעכב מהותית את ההתמודדות עם אתגרים פיננסיים"

Preliminary results 1 for Israel's (A1 positive) third general election since April 2019 indicate that Prime Minister Benjamin Netanyahu’s right-leaning bloc is on course to win 58 seats in the 120-seat Knesset, leaving it three seats short of a majority. The opposition centre and centre-left parties 2 won 55 seats, down from 57 in September 2019 (see Exhibit 1). After earlier votes both failed to produce a governing coalition, talks are more likely to be successful this time round. Most parties have little to gain from an unprecedented fourth election later in the year given historically high voter turnout (71%). That said, we expect coalition talks to be protracted 3 given that the ability for either bloc to garner enough support to form a governing majority is unclear at this stage, further prolonging policy inertia. A fourth election which materially delays steps to address the challenging fiscal trajectory remains a distinct risk. The risk of a major change in policy direction from a new coalition government is low given the broad consensus among the mainstream political parties on the basic tenets of economic and fiscal policy. That said, any governing coalition is likely to rely on a small majority which may constrain its ability to pass legislation.