Netanyahu fights for survival as Knesset vote opens, with deadlock possible

Polls opened in Israel on 27 October for the election of a new Knesset, the first general election since the Hamas attack of 7 October 2023. Prime Minister Benjamin Netanyahu is fighting for his political survival after three years of war.

The vote matters for investors and policy makers because the outcome will shape the government's approach to Iran, Gaza and Lebanon, as well as the public finances. Projections cited in the press point to a possible deadlock, which would leave coalition building open for weeks.

What happened

Voting in the Israel election for the Knesset began on 27 October and continues until 22:00 local time, with the first exit polls expected in the evening. About seven million voters are called to the ballot boxes to decide the country's direction.

A total of 36 parties are on the ballot. Only 13 of them appear in opinion polls, because they are tracked as being able to pass the 3.25% electoral threshold.

According to the surveys, 74% of the population has said it intends to vote. In the previous election, in 2022, turnout was just above 70%, according to Israel's Central Elections Committee.

• Election date: 27 October 2026, polls closing at 22:00 local time.
• Electorate: about seven million voters.
• Parties on the ballot: 36, of which 13 are measured in polls above the 3.25% threshold.
• Expected turnout: 74% according to surveys, against just over 70% in 2022.

Who is challenging Netanyahu?

The main rival to Netanyahu, the long-serving prime minister and leader of the Likud party, is Gadi Eisenkot, a former chief of the army. Coverage of the campaign describes the contest as a tough battle for Netanyahu, who is seen as an arch political survivor.

The campaign has been marked by tensions on security. Local media reported a clash between Netanyahu and the chief of the Israel Defense Forces, General Eyal Zamir, over plans related to Iran, and critics say Netanyahu sought political advantage from the situation. Thousands of Israelis held a final rally against Netanyahu ahead of the vote.

What is the precedent from earlier elections?

Israel has held repeated elections that produced narrow or unclear outcomes. In March 2020, final results gave Likud 36 seats, with the Netanyahu bloc short of a majority at 58. In September 2019, exit polls showed his bloc well short of 61 seats, with Avigdor Liberman poised to be kingmaker.

The most recent vote, in November 2022, ended differently: Netanyahu's right-religious bloc won 64 seats, an eight-seat majority, even though the raw vote was near parity between the camps. About 289,000 votes were wasted on anti-Netanyahu parties, including Meretz and Balad, that failed to cross the threshold.

That history explains why the threshold matters this time. With only 13 parties tracked as clearing 3.25%, small parties that fall short can shift the balance of seats between blocs.

What is the economic backdrop?

Israel's economy enters the vote with strong headline growth, but an analysis published on 25 October points to long-term challenges: soaring defence spending, rising debt, talent outflows and ultra-Orthodox exemptions.

Markets have been sensitive to the war. In June 2025, Tel Aviv shares hit record highs after US strikes on Iranian nuclear sites.

On 8 June 2026, the Tel Aviv Stock Exchange fell and the shekel weakened against the dollar after Israel and Iran exchanged fire for the first time in two months, with financial and insurance indices leading losses. Crude prices jumped over 4% that day. No market data for the TA-35 index or the USD/ILS pair on election day are available in the material reviewed.

Why it matters

The election matters because it is a verdict on Netanyahu's wartime leadership and will set the course of Israeli policy on Iran, Gaza and Lebanon, with consequences for the region and for Israeli assets.

Regional implications are also in focus. One commentary said West Asia's future hinges on Netanyahu's electoral fortunes. Separately, US President Donald Trump said this month the US would not launch an attack on Iran before the US midterm elections, and he later threatened another likely military operation against Tehran, according to a report on 23 October.

A new government will inherit high defence spending and rising debt, and will have to decide on the exemptions for ultra-Orthodox men that the analysis identifies as a long-term economic strain.

What are the risks and counterpoints?

The main uncertainty is whether any bloc can reach the 61 seats needed for a majority. Projections reported before the vote show a possible gridlock, which would prolong a caretaker period and delay budget and security decisions.

Polls have also been imperfect guides in Israel. Exit polls in March 2021 gave Likud over 30 seats and led Netanyahu to claim a "giant victory", yet updated projections showed his majority slipping out of reach. Final counts, including soldiers' and absentee ballots, have taken days to complete in past elections.

Security events could still intervene, given the recent exchange of fire with Iran and the tensions between political and military leaders reported before the vote.

What to watch next

The first signal will be the exit polls after polls close at 22:00 local time on 27 October, followed by the counting of ballots and the official results from the Central Elections Committee.

• 27 October, evening: exit polls from the main television channels.
• In the following days: the final count, including soldiers' and absentee ballots, and which parties pass the 3.25% threshold.
• After the results: the Likud and Eisenkot camps' efforts to assemble a coalition of 61 seats.
• Markets: the reaction of the TA-35 index and the USD/ILS exchange rate when trading resumes.
• Security: any further exchange of fire with Iran, and US decisions on military action after the American midterms.