ONE of the low points for Binyamin Netanyahu in Israel’s election campaign early this year came in response to a report criticising his government’s handling of the housing crisis. The prime minister declared: “There’s talk of house prices and cost of living. I don’t forget life itself, living—but the greatest challenge we are facing in our lives as Israeli citizens and this state is the threat of Iran’s arming with nuclear weapons.”

He went on to confound the polls and win a fourth term as prime minister; but “life itself” has become an ironic catchphrase for many of his opponents. To them it symbolises how Mr Netanyahu’s administration has focused on the Iranian threat at the expense of dealing with pressing issues closer to home. Now that the world’s powers have agreed on a nuclear deal with Iran, these problems are coming home to roost. Ten weeks after it was sworn in, the new government looks shaky.

The political turmoil which led to early elections prevented the passage of a state budget for 2015, and the five-party government is struggling to find over 8.5 billion shekels ($2.25 billion) to meet promises made during the long coalition negotiations. A staunch believer in fiscal discipline, Mr Netanyahu has already had to agree to relax next year’s deficit target from 2% to 2.9% of GDP. The Treasury warns that if the coalition’s demands are met, the deficit could go as high as 3.5%.

These budgetary woes are further complicated by two long-term economic issues now roiling Israeli politics. The government has been forced to postpone a vote on the future of Israel’s natural-gas sector, amid accusations that Mr Netanyahu has struck a poor deal with a consortium of the local Delek Group and the America-based Nobel Energy that currently holds most of the licences to extract gas from Israel’s offshore Mediterranean gasfields.

A government report on the defence budget was published this week, which called for a reduction of 12% in the number of career officers and for shortening conscription for men from three to two years. The report prompted an angry counter-briefing from the Israel Defence Forces General Command. Mr Netanyahu will now have to choose between doing what the report advises, as many of his ministers are demanding, or siding with his close political ally, Moshe Yaalon, the defence minister, who supported the generals by calling the report “shallow” and “delusional”.

Backed by only 61 members of the 120-strong Knesset (parliament), Mr Netanyahu is at the mercy of every backbencher. Threats by the most right-wing elements in the coalition not to support the government in crucial votes if it continues an unofficial freeze on new building in Jewish settlements in the occupied Palestinian territories led last week to the issuing of 906 permits for new housing units for Israelis in the Palestinian West Bank.

Mr Netanyahu is gearing up for another fight over the Iran deal, which he wants the US Congress to block. But he will almost certainly lose, and is beginning to realise that his troubles are closer to home than Tehran. His hopes that the Labour party would join his coalition, easing his domestic problems, were dashed on July 19th when its leader, Yitzhak Herzog, told a party conference that “the Netanyahu government failed in preventing the nuclear deal” and that “we have to send him packing.” At this point, the embattled prime minister can ill afford defeats both in Congress and the Knesset.