Measured and strategic approach to Budget 2026 key amid fragile global environment – Ibec
- Ibec’s Budget submission calls for targeted investment in areas that enhance productivity and competitiveness.
- Ireland should aim to balance income and expenditure, excluding corporate tax receipts above those typical of comparable economies.
- Tariffs in certain sectors pose a long-term threat to competitiveness, according to Ibec analysis
Ibec, the organisation representing Irish business, says Budget 2026 should strengthen Ireland’s agility in an increasingly challenging global climate, while continuing to support productivity, futureproof public capital projects, and build fiscal resilience.
In its pre-Budget submission, Matching Vigilance with Agility, Ibec emphasises that sound economic policy must focus on restoring a balance between income and expenditure over the coming years. This should exclude excess corporate tax receipts beyond levels seen in similar globalised economies.
Ibec also warns that persistent or emerging tariffs pose a serious threat to Irish business. While the broader economy may remain resilient, some sectors will suffer significant and lasting damage to competitiveness. These businesses and their employees must receive targeted support.
The submission highlights major opportunities on the horizon, including the digital and AI revolutions, a more investment-driven EU, and Ireland’s potential repositioning within shifting global supply chains. To capitalise on these, Ibec argues, Ireland needs not only strategic vision but timely delivery in areas like infrastructure, innovation, and skills, while maintaining fiscal stability.
Gerard Brady, Chief Economist and Head of National Policy at Ibec, said:
“The future of the global economy remains deeply uncertain, as demonstrated again by President Trump’s announcement to now impose a 30% tariff on EU imports on August 1st.
What is clear, however, is that the economic model Ireland has relied on for the past 50 years, rooted in multilateralism, openness, and globalisation, is under serious strain.
This Budget must be framed in the context of ongoing trade tensions and recent US tax reforms. We need to make the right choices to safeguard our competitiveness and ability to attract and retain business. That means investing in productivity focused areas like infrastructure and committing to continue that investment regardless of the economic climate.
We must go much further on skills and innovation. Ireland still falls short of where it needs to be as an innovation leader and R&D performer. We also need to address the high cost of doing business.
The recent ‘One Big Beautiful Act’ (OBBA) in the US increases volatility in global corporate taxation and poses a significant competitive risk for Ireland. While it brings the potential for tax receipt surges, it also exposes us to downside risks. We cannot afford to be vulnerable if those risks materialise.”
We must also use the tools available to attract investment. Enhancing the R&D tax credit is one such lever. Widening its scope to support all forms of innovation would provide a timely and material response to current investment challenges.
Other countries, such as Germany, are preparing major policy shifts to reduce industrial energy costs-moves that affect competitiveness across entire economies.
Even as some day to day investment decisions are delayed or paused, global economic realignment is taking shape in boardrooms worldwide. Our members are already engaged in active scenario planning for future investments. Ireland cannot afford to be complacent.
To stay competitive and secure long term prosperity, we must meet this moment with both vigilance and agility.”
Budget 2026 Priorities
- Invest in agility to respond to a changing global environment: Ireland must be positioned to take advantage of emerging opportunities, as the investment decision-making process intensifies worldwide.
- Reduce over-reliance on volatile tax receipts: A balanced fiscal approach is necessary, particularly as corporate tax receipts are likely to be more volatile into the future.
o A National Training Voucher Scheme
o A sustainable funding model for apprenticeships
o A multi-year plan to support innovation and transformation in higher education
o A €70 million increase in public research investment
o A new multiannual fund for research infrastructure
- Maximise the impact of the R&D tax credit:
Expand the scheme to include process innovation, AI, and green technologies. Allow application to offshore related-party research (with safeguards), provided IP and value remain in Ireland.
o More flexible use of the Small Benefits Exemption
o Simplified non-taxable benefits reporting
o Completion of the interest deductibility review
o Improvements to the Participation Exemption for foreign dividends
- Support sectors under pressure:
Targeted measures on PRSI, trade supports, and energy costs are needed to address rising costs, avoid tax-related disincentives for job creation, and assist sectors impacted by tariffs.
