'Small income gains' for people in Budget 2027 - ESRI

A new ESRI analysis of the Budget 2027 reveals small income gains for people in Ireland. The changes to direct taxes, welfare measures, and childcare supports are expected to keep pace with price growth of 3% and wage growth of 4.1% for 2027. Lower-income households will benefit most from the additional protective measures, with higher-income households experiencing minimal changes in disposable income.

The new €500 per year cost-of-disability payment helps offset the higher consumption needs of households with disabled members. However, the research cautions that the payment may not fully cover the additional expenses faced by these households. Increased childcare supports aim to reduce costs for families using formal childcare, but the overall impact of the Budget package on child poverty will depend on expanding childcare supply.

Experts suggest that more measures are required to meaningfully reduce child poverty. Regrettably, targeted energy supports in the Budget benefit all households equally, making it less effective and costly. Targeted measures would have been more beneficial in protecting low-income households while preserving the incentive for households to decarbonise.

Despite the Budget's overall mildness, since the Covid-19 pandemic, households are slightly worse off, with the lowest-income group experiencing substantial income gains. Overall, the ESRI's assessment indicates policy changes have been gradually decreasing poverty rates for all groups.