Ireland will focus on cutting business taxes, incentivising foreign investment and improving stretched public services and infrastructure when it taps some of the healthiest public finances in Europe on Tuesday for its next expansionary budget.
While a year-long multinational corporate tax boom that shows no sign of slowing has given Dublin enviable leeway among EU states to cut taxes and rapidly increase spending, ministers have pledged more discipline with their budget for 2026.
They plan to curtail hikes in day-to-day spending to 6.4% next year and moderate further in future years from the recent 8-9% range, partly to guard against the foreign investment-focused economy's exposure to U.S. trade policies.
That will mean ending the one-off support payments of recent budgets that eased cost of living pressures. A promised cut in the VAT rate for hospitality firms and incentives for much-needed house building will leave no room for income tax cuts.
The bulk of the extra 9.4 billion euros available will again go towards public services to meet the demands of a fast-growing population and economy that has so far shrugged off the threat of tariffs, growing 3.8% year-on-year in the first half of 2025.
Representatives for foreign multinationals whose jobs and tax dollars are pivotal to the economy will be watching closely for changes to Ireland's tax credit regime for research and development, having called for the rate to be increased and scope widened to keep pace with competitor countries.
"Other jurisdictions are seriously upping their game in terms of competing for these investments, and if we don't do anything we're going to be left behind," said Ian Collins, head of Irish innovation incentives at accountancy firm EY.
