Budget 2027 was meant to make amends. Last year’s decision to prioritise a VAT cut for hospitality over income tax cuts for workers left people feeling short changed, and Ministers spent much of this year promising that this budget would be different.
Simon Harris will likely be happy with his first budget as Finance Minister. His income tax package went further than expected, and his much-touted Irish Investment Account was well received. Jack Chambers had the harder task, having spent months warning Ministers, in public and in private, to rein in their spending demands. On Tuesday he presided over public spending of €125.6 billion, with new measures to bring down the cost of childcare and increases to social welfare. Yet the scale of the spending appears to have done little to shift the public mood. Housing, health and energy costs still dominate as key issues for voters, and there is little sense that this budget has driven any improvements in these areas.
Another central character in this year’s post budget discussions was Minister Patrick O'Donovan, whose decision to grant €20 million less than they had expected under a previous agreement drew criticism and controversy both inside Leinster House and from industry groups. The row deepened when it emerged that O'Donovan had secured an extra €21 million in the final days of negotiations, seemingly specifically for RTÉ. The Minister met RTÉ's leadership on Thursday and senior Government figures now expect the funding to be restored, though the debacle would not have been where Government would have liked to see the focus of the Budget.
The opposition response to the budget was predictably scathing. Sinn Féin's Pearse Doherty described the tax package as an "insult to workers" and said families were still waiting for meaningful help with energy costs. Social Democrats TD Cian O'Callaghan said struggling households had been left on their own and called the budget "totally devoid of ambition". Labour took a different approach; party leader Ivana Bacik called it "pathetic", while Finance and Public Expenditure spokesperson Ged Nash labelled the two Ministers as "Soundbite Simon and JackGPT". Given how much of the budget was drip-fed through the media, they had plenty of time to hone their responses, and little of what was said strayed too far from their usual script.
Overall, the Government has come through budget week with its reputation largely intact, though the budget itself is unlikely to live long in the memory. The real test will come once the measures take effect and households can judge whether they feel any better off.
Political Update:
Jack Chambers Calls for Return to Pay Talks in the Wake of Public Sector Industrial Action
Approximately 250,000 public sector workers across health, education and local authorities have begun industrial action in the form of a work-to-rule, amid an ongoing dispute over pay. The action, involving Fórsa, the country’s largest public sector union, has seen special needs assistants, health workers, civil servants and local authority employees refuse to undertake duties beyond their normal responsibilities.
The dispute follows the expiration of the Public Service Agreement 2024–2026, which provided for a 9.25% pay increase over two and a half years in response to cost-of-living pressures.
Industrial action has since escalated, with other public sector unions commencing action this week ahead of two planned strikes on 14 and 21 October. The Irish National Teachers’ Organisation (INTO) expressed a loss of confidence in the Government’s approach to negotiations, arguing that discussions have focused too heavily on reforms rather than pay.
Responding to the dispute in his Budget speech this week, Minister for Public Expenditure Jack Chambers urged unions to suspend industrial action and return to negotiations, pointing to the Government’s €1.2 billion allocation for public service pay as evidence of its commitment to reaching a new agreement.
He called on the Irish Congress of Trade Unions (ICTU) and other representative bodies to “re-engage as a matter of urgency” and stand down ongoing industrial action, stressing the importance of avoiding further disruption to public services.
Economic Update:
Business groups unhappy with minimum wage rise decision, announced in Budget 2027
Business groups, Ibec, the Small Firms Association, and Retail Ireland, have expressed disappointment over Government's decision to accept the Low Pay Commission's recommendation for an increase to the minimum wage.
The 79-cent increase in the National Minimum Wage will bring the hourly rate from €14.15 to €14.94, almost double in what most businesses were expecting the increase to be.
The groups have expressed concerns that the increase would add to existing labour, energy and regulatory cost pressures, which will be most acutely felt by the small enterprises across the retail, hospitality and experience economy sectors.
On Wednesday, Minister for Enterprise, Peter Burke, announced the removal of the 2029 living wage timeline in an effort to provide more certainty and support for employers. While this measure has been welcomed by small business owners, the Irish Congress of Trade Unions (ICTU) has accused the Government of breaking its promise to replace the NMW with the living wage.
Ibec and the SFA acknowledged that changes to the PRSI system would help offset some of the additional costs faced by businesses. However, both groups emphasised that it is ultimately businesses, and not the Government, that bear the cost of paying the minimum wage.
Sustainability Update:
El Niño to intensify before peaking in December
The United Nations has said that El Niño will intensify even more before peaking in December, and could be among the strongest since 1950.
According to the World Meteorological Organization’s (WMO) monthly Global Seasonal Climate Update, the weather phenomenon in the Pacific Ocean is set to bring higher temperatures to much of the planet, and shift rainfall patterns, increasing the risk of drought and floods across different regions.
The index, which measures sea surface temperatures across the central-eastern equatorial Pacific, increased from 1.6C above normal in June to 2.5C above normal in August.
For October through to December, the anomaly is forecast to reach approximately 3.7C above normal, the highest since observations began - far surpassing the previous record of 2.6C set in 2015-2016.
Around the world:
Pensioner Maricarmen Abascal dies just weeks after her eviction sparked housing protests across Spain
The pensioner whose eviction sparked protests across Spain died this week. Maricarmen Abascal was evicted from her life-long Madrid home on a stretcher after the real estate firm that owned the apartment drastically hiked the rent. Outrage at her eviction triggered national demonstrations, with hundreds of people camping in Madrid's Puerta del Sol square in the most symbolic of the protests.
The movement piled pressure on the minority leftist government, led by Spanish Socialist Workers' Party, to present urgent housing measures, including more restrictions on evictions and the automatic renewal of tenant contracts. However, the coalition’s lack of parliamentary majority was underlined last Friday when Congress rejected their proposed measures.
Socialist Prime Minister Pedro Sanchez was prompted to call a snap election, which has been scheduled for the earliest possible date of 29 November, in which housing will feature prominently.