Budget 2027: Balancing cost-of-living pressures with Ireland's future growth
EY examines key measures announced in Budget 2027, from tax relief for working families to supports for Irish businesses
Budget 2027 was delivered last week against a backdrop of global economic and geopolitical uncertainty.
As set out in its Summer Economic Statement, the government’s priorities in framing Budget 2027 were to reward working families, provide targeted cost of living measures and continue to support investment and innovation.
Despite Ireland’s current healthy public finances and strong domestic economy, the government faced a difficult balancing act – how to respond to demands across society while avoiding adding to existing inflationary pressures.
The result is a broadly balanced Budget focused on making work pay, supporting households and accelerating investment.
The Budget seeks to support the “squeezed middle”, particularly working families who find themselves financially constrained in an economy with an ever-increasing cost of living.
The increase in the income tax standard-rate band and tax credits, the higher rent tax credit and childcare cost caps will provide welcome relief to these families.
Increased Capital Acquisitions Tax thresholds will also benefit families planning intergenerational transfers, and the new Savings and Investment Account could also make long long- term investment opportunities more accessible to these working households.
Budget 2027 also promises continued substantial investment in infrastructure including housing, transport and other public infrastructure.
While the increase in the minimum wage will increase costs for many businesses, Budget 2027 contains welcome measures to promote investment and innovation for businesses.
These include the extension of various incentive schemes, the allocation of €1bn to the Irish Strategic Investment Fund for investment in domestic business and enhancements to the existing R&D tax credit regime, amongst others.
A reduction in complexity also appears to be on the cards in certain areas of tax payments and reporting obligations, which will be welcomed by businesses.
Overall, Budget 2027 demonstrates a clear commitment to strengthening living standards, enhancing competitiveness and investing in the foundations of future economic growth.
How effectively the measures announced address challenges such as cost-of-living pressures and infrastructure constraints will be of particular interest to the Irish public.
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