THERE will be no multibillion euro cost of living busting package of support for households in the upcoming budget due to concerns that a Trump slump will wipe out Ireland’s corporation taxes.
Finance Minister Paschal Donohoe confirmed Budget 2026 “will not repeat” another €2.2 billion of living package, saying past budgets introduced measures when inflation was at highs of five, 10 or 15 per cent.
The Government has instead this year leaned more towards the possible introduction of “targeted” payments for those most at risk of poverty.
Donohoe said he is “well aware” of the impact of the cost of living crisis but said there are risks when it comes to funding permanent measures with tax receipts that may not always be available in the future.
With concerns that Trump’s tariffs could wreak havoc on the Irish economy, Donohoe warned that there will be no repeat of the cost of living supports of the past.
This is despite the Dail hearing yesterday how skyrocketing grocery prices is leaving people struggling to keep their heads above water.
Speaking to RTE’s Morning Ireland, Donohoe said: “I’m absolutely well aware of the impact of the cost of living and what it means for so many people in our country in our society.
“I see it and I experience that. I know the difficulty it poses for many, for very many in our country.”
He added: “What every budget has done is it finds different ways of helping with the cost of living.
“But I have to make the case again here today that the kind of measures that we’ve had in the past of €2.5 billion packages.
“Packages of that scale were in place when we had inflation of five, 10, 15 percent. And we should not and I believe will not repeat that again.
“But we will find other ways, budget by budget and over four to five budgets instead, helping with and responding back to the needs within our society.”
The Budget 2025 package – the largest in the history of the State – was made up of a mixture of increased payments, 10 once-off lump sums for social welfare recipients, a minimum wage increase and tax changes.
It included two double Child Benefit payments handed out before Christmas, €400 extra for carers and €300 for those on Fuel Allowance.
Budget 2025 also provided an additional October cost-of-living double payment as well as the usual social welfare Christmas bonus.
But Donohoe and Public Expenditure Minister Jack Chambers previously admitted that they are reluctant to make any spending or taxation decisions in Budget 2026 that “create new risks”.
This means that the social welfare bonus payments and energy credits of recent budgets will not be a feature of this year’s budget announcements.
ECONOMY ‘CHALLENGES’
Sinn Fein’s Pearse Doherty told the Dail this afternoon that food prices in particular were putting people under pressure as he called on the Government to take action.
In response, Tanaiste Simon Harris claimed the Government were already helping people with the cost of living through measures like the carers grant, the back to school allowance and the pay increase for public sector workers – all of which will be paid out over the summer.
The Fine Gael leader admitted that there will be no repeat of the support packages of recent budgets but there will be moves to help people cope with the cost of living through different measures that are currently up for negotiation.
Donohoe said there are “challenges” ahead for the Irish economy as price hikes, “recessionary trends” and the looming impact of US tariffs barrel towards us, but said we are heading towards those challenges in a “position of strength”.
He said different scenarios for the Irish economy – where tariffs were and were not permanently applied by the US – have been taken into account.
Anything we do in this space needs to be targeted and focused on those on low incomes, particularly workers.”
Social Protection Minister Dara Calleary
Donohoe explained: “What we remain to see yet is what the United States assessment will be, which is why it’s important that we have surplus in our public finances and we have so many people at work.
“These are the kind of challenges that we could need to confront but I have confidence that we can do that.”
Taoiseach Micheal Martin also previously ruled out a specific repeat of the €2.6 billion cost-of-living package unveiled in Budget 2025.
He declared: “Our agenda and objective in the budget, when it comes in the autumn, will be again to provide within the social protection payment programme and in terms of taxation, to do what we can to alleviate the pressures on people.”
‘TARGETED’ BUDGET EFFORTS
The news of a more cautious budget comes as Minister for Social Protection Dara Calleary confirmed his Department would be taking a more “targeted” approach to address poverty, particularly child poverty.
He vowed that any changes made to the social welfare system this year will be targeted and “focused on those most at risk” of poverty and those in consistent poverty.
The Fianna Fail TD said the Programme for Government includes a “range of measures” to support children and their families in Budget 2026.
He explained: “One such commitment is to explore a targeted child benefit payment and examine the interaction this would have with existing targeted supports to reduce child poverty.
“Existing supports include the working family payment and the child support payment.”
Calleary said the Department of Social Protection is examining a targeted second-tier of the €140 Child Benefit payment but added that it is a “complex issue”.
'OUT OF CONTROL' PRICING
By GRAINNE Ni AODHA
THE “crazy” increase in the cost of everyday food items has been raised in the Dail, as the opposition accused the Government of being inactive on the issue.
Sinn Fein leader Mary Lou McDonald said that in the past year, butter had become a euro more expensive, a kilo of Irish cheddar was up 57 cents, and two litres of milk was up 27 cents.
She cited figures in the Irish Times that indicated a kilo of chicken had cost €4.99 euro in 2022 and now costs €11.
“That’s just crazy,” she said, telling the Dail that prices were “out of control”.
“Many households are now paying 3,000 euros extra a year in the supermarket than they were in 2021.”
She accused the Government of having “failed to exert any real pressure” on retailers, after a junior minister handling the issue was “unceremoniously ignored”.
The Dublin Central TD blasted: “Your latest plan, it seems, is to do absolutely nothing, to stick your head in the sand, allow people to be ripped off week in and week out.
“Let me just give you some more CSO data – over five years, sugar is up 54 per cent.
“A filet of cod, up 55 per cent, pork sausages 21 per cent, lamb 48 per cent, spaghetti up 46 per cent.
“Nothing has changed, people are still to the pin of their collar.”
He explained: “Táimid ag obair ar an two-tier payment. We are looking at that but there is quite a lot of work involved and it is a complex issue to examine.”
The proposed Child Benefit shake-up would lift some 55,000 children out of income poverty and 25,000 from consistent poverty, according to a recent report from the Economic and Social Research Institute.
The €140 flat payment will still be paid to everyone, regardless of income.
Calleary said the Department of Social Protection needs to work “collectively” with other Government Departments to ensure there are no “unintended consequences” as a result of the payment.
He explained: “If we are to do this, people cannot lose out. We have to look at expanding the working family payment and the child support payment as part of targeted measures.
“Anything we do in this space needs to be targeted and focused on those on low incomes, particularly workers.
“We have to ensure that people do not get a lower payment under a new system than they are currently getting.
“That could be an unintended consequence of some of the work we have seen today.”
‘EXPANSIONARY PACKAGE’
Tanaiste Simon Harris told colleagues that the Budget will be an “expansionary package” and most of the measures will take effect next January.
Speaking at Wednesday’s Fine Gael parliamentary party meeting, Harris said one normal Budget will be announced in October.
Although nothing has been confirmed and Harris said decisions have yet to be made, he told the meeting that the VAT rate for small businesses will be cut permanently in the Budget.
He also said childcare fees must be permanently reduced over the lifetime of this government.
Harris also said the cost of education, across all levels, must be reduced along with healthcare costs, and significant progress should be made in children’s disability services and special education.
