Budget 2027: What it did and didn’t deliver, and what Irish SMEs need to know

Budget 2027’s headline figures told a story of prosperity as Ireland is sitting on the largest cash reserves in its history. But what are people and SMEs in Ireland actually getting, day to day, from this money?

Paul O’Donovan gives his assessment of what this budget means for businesses, families, and Ireland in the longer term.

Against an unpredictable macroeconomic backdrop and shifting international tax dynamics, the source of Ireland’s wealth remains precariously narrow, says Paul.

“The government’s cash reserve is the highest that it has ever been, and one of the highest in Europe at the moment. But there is uncertainty there – around 80% of Corporation Tax comes from foreign multinationals, and the top 5 firms account for over 40%.”

With foreign multinationals footing most of the bill, Ireland is exposed to any shift. Meanwhile, everyday consumers and business owners are facing ongoing inflation in the supermarkets, paying for services, and worrying about the prices they will find next week at the fuel pump.

Budget 2027: A “missed beat” on infrastructure

Paul views Budget 2027 as a major missed opportunity. Instead of channeling the record levels of revenue into vital national infrastructure – transport, healthcare, education, and housing enablers – the state is accumulating cash as bottlenecks worsen.

In Cork alone, he pointed out, light rail projects to Ballincollig will be another 10 years at least, and Carrigaline – one of the largest towns in the country – will not be connected at all. The bus network is overstretched, hospitals are asking people not to come in, and prime city centre land sits derelict.

“I think that’s a missed beat with the excess monies. This is the second budget in this government’s term; we’ve had four others in this current cycle of large surpluses. So six budgets have passed – and have we really seen big changes in our lives, and in the health system, and out on the roads? On the way to work, with traffic jams and congestion? I don’t think so.”

The daily reality of the middle-class squeeze

For working families, the budget offers little relief. Adjusting the higher tax threshold to €46,250 has a combined net effect of saving an individual roughly €750 a year, a sum quickly wiped out by high childcare costs, mortgage interest rates, and groceries.

“The middle class here in Ireland is overlooked. For many, by two weeks into the next month the last of the paycheck is gone, and then they’re living off of overdraft for two more weeks until a paycheck comes in again.”

Young people know they have better alternatives. Rather than deal with inflation, soaring rents, and the housing shortage, our educated younger workers are seeking a viable standard of living overseas. Young talent can’t afford to stay – and returning experienced diaspora face the same issues on return. So businesses are left carrying the can, with firms across regions like Cork now forced to provide residential accommodation to get personnel through the door.

“You have a housing crisis and you have a huge amount of the population in their early 30s looking either to come back into Ireland or they’re looking to settle down. And essentially they’re still living at home or they’re waiting on parents, if they’re lucky enough, to provide them with funds to enable them to try and get on the property ladder.”

By failing to convert record state surpluses into basic housing supply and infrastructure, Ireland is backing itself into a competitive corner. With the 15-year-old bank-bailout USC still in place (and what it’s doing remaining a mystery, as it’s no longer funding the banks) and minor Capital Acquisitions Tax (CAT) threshold adjustments failing to protect family homes, household budgets remain acutely strained.

“I don’t think a €20,000 increase in the children’s threshold, Class A, is going to do much. The price of housing has jumped. Succession planning for parents, to make sure the kids can get or keep a family home, is very difficult. If you have a family home of 700k going to a child, at 420k they’re still paying tax at 33% on the remainder, which is almost 100k.”

Does Budget 2027 support Irish SMEs?

Paul says no. “I don’t think it was a budget for the SME. There’s just an array of costs that have hit the SMEs in the last while. Ireland is becoming an expensive place to do business, with the minimum wage heading for €14.94, high rents, high energy. This is also having an effect on attracting companies to do business here, such as retailers and manufacturers.”

While headline statements praised enterprise, the day-to-day cost of keeping the doors open are getting higher.

Things are tight on the bottom line and the banks are still very slow to lend. Margins across retail, hospitality, and services are being cut into from every angle. Higher minimum wage and Employers’ PRSI have driven payroll expenses upward. A fractional Capital Gains Tax reduction from 33% to 31% will hardly transform operations, says Paul.

Leaving the Entrepreneur Relief lifetime threshold pegged at €1.5 million ignores years of asset inflation and fails to release much-needed commercial land. And, for employers struggling to hire, the housing deficit has evolved into an operational crisis, forcing firms into the property market just to accommodate staff.

Overall, there’s a disconnect between the government’s fiscal optimism and the Central Bank and independent fiscal bodies’ more cautious, restrictive stance. It echoes the end of the Celtic Tiger era, when the political establishment assumed growth would last indefinitely but structural vulnerabilities were building beneath the surface.

“You must watch your cycles,” says Paul. A downturn today would have a crushing impact on ordinary households and businesses, perhaps even more so than past recessions, because the baseline cost of living and doing business has already peaked at extreme levels.

Businesses and consumers are being squeezed by layered costs, especially the fuel and energy crisis, and the deferral of carbon tax increases only postponing the pain until February. The public sector continues to absorb record surpluses while critical infrastructure (housing, public transport, grid infrastructure) is built excruciatingly slowly. The public sector could learn a lot from how the private sector operates here, Paul says.

“People that are in authority should seek more professional guidance. I’m not sure where in the civil servants are the top accountants, the top economists that should be saying: we need to look at this and watch this. When you see the public sector spending and what it gets, you often ask  – why aren’t they minding their money? Why aren’t they treating it as if it’s their money? They could learn a bit from the private sector about how they manage and guard their resources.”

What’s changing for SMEs in 2026 and 2027: Funding shifts and M&A waves

Overall, there’s no doubt the budget disappointed many businesses. But there are plenty of positives out there, following an excellent summer for tourism, and with engineering and pharma continuing to perform well. While direct budgetary support is thin, there is funding out there if you know where to look.

• SBCI growth lifeline: Traditional banks remain cautious so the Strategic Banking Corporation of Ireland (SBCI) scheme, which reopened on October 12^th, has been eagerly awaited by companies. Offering accessible liquidity from 80% state-backed loans available up to €500k over up to seven years, crucially without personal guarantees. Paul emphasizes that timing and purpose are everything here: “If you’re looking at growth and expansion, the SBCI is certainly a model that I would highly recommend, but if it’s shoring up debt, you can’t borrow debt on debt. It doesn’t work.”
• Grants for non-tech sectors: Irish innovation support is not reserved for tech firms. Enterprise Ireland (EI) and Local Enterprise Offices (LEOs) offer substantial grants of up to €100k, along with enhanced R&D tax credits at 35%. Indigenous businesses in manufacturing, engineering, and PPE are successfully drawing down these and other supports. Paul recommends getting an expert in for advice here if you are not sure of your options.
• Accelerating M&A and exits: A consolidation wave is underway across Ireland. Trade buyers and private equity funds are actively buying established family businesses. For founders eyeing retirement, early tax structuring and succession planning is critical to getting the best possible arrangements in place here.

Paul’s recommendation: Get out of the weeds and work on your business

With economic warning signs flashing, Paul’s primary guidance for business owners is simple: stop getting trapped in the daily firefighting.

“You caught up in the weeds and you don’t come out and look at what’s going on. You need to take a breath, from running and being in the business, to working on the business. Meet the bank, meet the accountant, meet peers and colleagues and get asking. What is available to me? What facilities, what grants, what loans, what R&D can I qualify for? What can I do next?”

Take a step back and take the time to look through your numbers:

1. Treat cash as king: Implement rolling monthly or bi-monthly management accounts. Track breakeven metrics closely and model payroll inflation against current pricing structures before margins erode. “You need to have your budgets and cash flows done, and understand where you’re going and where your pinpoints are in meeting those cash flows.”
2. Conduct a grants and relief audit: Meet your advisors to assess your eligibility for R&D tax credits, Enterprise Ireland capital grants, and energy transition funding. Get good advice in this area!
3. Plan your capital strategy early: Whether you are positioning for growth or for a multi-year exit, the Irish banks often move too slowly. Know your options and prepare long before you need the funds.