Updates from Ibec CEO Danny McCoy

CEO Update: What Budget 2027 means for businesses

Friday, 9 October

The latest CEO Update to Ibec membership from Danny McCoy

I am pleased to share Ibec’s suite of assets for Budget 2027, including our studio broadcast briefing, our analysis deck, and the latest Ibec Responds podcast detailing what the measures mean for your business. You can explore these in full on our dedicated campaign webpage.

Much of the media commentary in recent days has framed Budget 2027 as a budget for households. However, as our analysis shows, this is a budget that delivers substantial wins for Irish business across key areas where Ibec has campaigned relentlessly since the outset of this Government’s term.  

We particularly welcome Government’s positive response to Ibec’s sustained advocacy on unlocking the National Training Fund (NTF). The business community understands the transformative shift AI is bringing across every sector. Navigating this transition is not a passive process. Failure to proactively reskill our workforce puts a significant portion of Ireland's competitive advantage at risk.  

Budget 2027 places a strong emphasis on supporting this workforce evolution. The decision to release €360 million of the NTF with 150 ringfenced for AI related training is a good first step to ensure businesses and workers can capitalise on the opportunities AI presents. We will continue to advocate that the NTF serves as the primary engine to build an AI-fluent, resilient workforce.  

Government has adopted several other core Ibec recommendations. Extending the qualifying criteria for R&D Tax credit along with positive adjustments to R&D outsourcing rules will ensure more companies conducting high-level research across emerging fields qualify for the 35% credit announced last year. The reduction in the CGT rate from 33% to 31% provides a meaningful boost to Ireland’s entrepreneurship ecosystem. As we adapt to an era where corporate tax rates alone can no longer carry our international competitiveness, these structural measures will directly reinforce Ireland’s pitch for foreign direct investment.  

In terms of labour costs, while it was important to pause any increases to the living wage, businesses will be disappointed by the adoption of the Low Pay Commission’s minimum wage recommendation, Budget 2027 and the recent Cost of Business Report reflect a clear acknowledgement of the mounting cost pressures facing business from cumulative labour expenses to regulatory overheads. Ibec has long campaigned for PRSI offsets to mitigate statutory wage increases. Following our success in securing this commitment in the Programme for Government, Tuesday’s announcement brings tangible progress. While PRSI thresholds typically track minimum wage increases, Government has expanded these bands by nearly 9% this year to help defray employment costs. Lowering the headline national minimum wage increase to a rate that is more in line with the wage increases reported by many Ibec members in our recent Pay Trends Report helps to maintain alignment with business realities. We will engage extensively with Government to ensure this Programme for Government commitment is fully realised in practice.

We also share the disappointment of a number of sectors and organisations that, against the backdrop of funding challenges, have been impacted by the Budget. A €20 million drop in funding for RTÉ, as well as no additional funding for the broader university sector, is a concern. At a time of growing mistrust and misinformation, we need an educated society. A well-supported and adequately funded national broadcaster and university sector are in the collective interest of all businesses, and we must continue to support their position.

Meanwhile, the new Savings & Investment Scheme offers a genuine opportunity for households to achieve stronger financial growth while putting domestic capital to more productive economic use. Unlocking its full potential will require a fundamental shift in how the public approaches investment and Ibec looks forward to collaborating with Government to drive understanding and adoption. We will examine the forthcoming Finance Bill closely for further operational detail.

Budget 2027 arrives against a challenging macroeconomic landscape for many of our European peers. Ireland stands in a structurally distinct position. In an environment of elevated borrowing costs Ireland’s policy measures are notably expansionary compared to European peers. This reflects our unique fiscal position where we expect a surplus of €9.5 billion in 2027 and a net debt-to-national-income ratio of 41%. Our economic analysis highlights that Ireland will collect more corporate tax in 2027 than was collected across all tax heads combined thirteen years ago. This fiscal strength provides a vital cushion, enabling us to navigate global uncertainty with greater confidence from a position of relative stability.

As we close out Budget Week, our focus now and for the coming year is to ensure we continue investing in the skills needed for tomorrow's workplaces, while maintaining competitive business costs. We will advocate for policy measures that support both in Budget 2028 and beyond.

Regards,

Danny