THERE are still deep divisions within the Irish Government over the direction of Budget 2026.
Taoiseach Micheál Martin has issued a warning about Ireland’s economic prospects, citing serious concerns over US trade tariffs, weakening corporation tax revenues and mounting government spending.
Martin cautioned against inflated expectations ahead of the October budget, emphasising that economic conditions demanded prudence.
“It was a sobering meeting,” Martin said after high-level discussions with Tánaiste Simon Harris, Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers.
“There are serious challenges ahead, particularly with rising expenditures and external pressures.”
However, Tánaiste Harris struck a more optimistic tone, calling for an expansionary budget that invests in public services and reduces everyday costs.
“We’ll be doing more to actually invest in our economy and reduce the cost of education, energy, and living,” Harris said, advocating for a budget that supports growth through targeted spending.
One of the key flashpoints in the budget debate is the student contribution charge.
Higher Education Minister James Lawless sparked backlash over the weekend by suggesting fees would return to €3k, reversing temporary cost-of-living reductions.
Fine Gael responded by reaffirming its commitment to lowering education costs.
While Lawless later clarified that no final decision had been made and that he lacked current funding to extend fee cuts, he vowed to fight for reductions during budget talks.
Harris, downplaying internal conflict, insisted there was “certainly no rift” in Cabinet, noting that fees already paid under Budget 2025 would not increase for the current academic year.
A separate debate is unfolding around increases to social welfare payments.
Harris proposed a more targeted approach that prioritises child poverty, carers, and older people, rather than across-the-board increases.
This view has met resistance from Martin, who argued against distinguishing between recipients.
“People on Jobseeker's Allowance are at a higher risk of poverty. That’s the message I’m getting from social protection officials,” he said, signalling pushback against Fine Gael’s approach.
The issue mirrors past tensions, such as last year’s internal disagreement when a similar proposal failed to gain traction.
Despite Harris denying any current discord, the policy split is becoming increasingly evident.
Opposition parties have seized on the government’s internal disagreements to promote their own alternative budgets.
Sinn Féin is proposing a €2.5bn cost-of-living package that includes rent relief and 500 new hospital beds, alongside tax hikes on vacant homes and wealth accumulation.
Labour’s focus is on eradicating child poverty, reallocating €700m earmarked for VAT cuts in hospitality toward a new tier of child benefit and expanding the Fuel Allowance.
They also propose an Energy Income Tax Credit for lower-income households with poor energy ratings, aimed at supporting over 675,000 homes.
Despite rising energy prices announced by major suppliers, the government is unlikely to reintroduce energy credits this year.
Justice Minister Jim O’Callaghan, standing in for the Taoiseach during Leaders’ Questions, noted that inflation has dropped significantly compared to last year, reducing the need for blanket supports.
Still, he emphasised that finance and public expenditure ministers would ensure hard-pressed families remain a core focus of budget decisions.
