Some positive measures but Budget fails to address long-term risks facing indigenous enterprise
Dublin, 6th October 2026: ISME has welcomed some positive measures announced in Budget 2027, but warned that the Budget fails to address the growing structural imbalance between indigenous enterprise and multinational-led growth.
The association said that while several sensible measures have been adopted, the Government has once again missed an opportunity to strengthen the competitiveness, resilience and scaling potential of Irish-owned businesses.
Neil McDonnell, Chief Executive of ISME, said: “Ireland’s long-term economic resilience depends on building a stronger indigenous enterprise base. The growing imbalance between domestic business and multinational activity represents one of the greatest risks facing the public finances, yet Budget 2027 does little to address that challenge. There are positive measures in this Budget which recognise some of the challenges facing individuals and households, but indigenous businesses are once again at the back of the queue.”
Areas of concern
ISME expressed disappointment that a number of significant competitiveness issues remain unaddressed.
- The failure to address simple, low-cost measures to assist SMEs to scale-up is concerning. The Central Bank, IFAC, ESRI and NCPC have all income concentration from foreign multinationals as a national risk. Budget 2027 was a missed opportunity to mitigate this risk.
- We are still dangerously dependent on foreign owned businesses for our corporation tax, income tax and VAT take.
- The 5.6% increase in the National Minimum Wage is running at one and a half times the rate of inflation, and almost twice the rate of wage inflation. It will impact consumer prices in those services businesses where it is passed on.
- Close company rules penalising small business from retaining earnings should have been eliminated.
- The decision to maintain the deemed disposal rules on funds makes no sense. This was never a good idea and should have been terminated this year.
- The balance between spending increases and tax cuts means this is another pro-cyclical budget, despite the risks highlighted by many commentators.
- While the social protection increases will be welcomed by recipients, our social fund is in significant deficit. ISME made proposals that everyone should pay 2% of all earnings into the social fund, and higher paid workers should pay 6% PRSI on earnings above €424 per week.
ISME said its sole focus in its pre-budget submission was the scaling of indigenous enterprise because the growing divergence between domestic business activity and multinational activity now represents a significant risk to Ireland’s economic resilience.
The association notes that concerns about domestic business dynamism and the concentration of economic activity are increasingly being highlighted by major economic institutions.
Measures welcomed by ISME
ISME welcomed a number of announcements, including:
- The increase in the standard rate income tax cut-off to €46,500, which should be indexed to the average industrial wage in future. All personal credits have been increased by €125.
- The decrease in CGT from 33% to 31% is long overdue. However this rate is still too high, and is costing the Exchequer between €500m and €1.5bn in CGT foregone. We need to see a roadmap to the ISME proposal for a standard 25% rate and a 20% entrepreneurial rate.
- The savings and investment scheme designed to mobilise idle household deposits and channel them into productive investment. ISME looks forward to further detail.
- The permanent reduction in the carbon tax from €63.50 to €48.50 per tonne is a necessary response to the extreme price volatility in fuel costs.
- The small increases in the CAT threshold are sensible, but ISME believes thresholds should be automatically indexed. Existing business reliefs punish the transfer of family businesses.
