Caitríona Redmond: ‘Twas Budget eve, babe, but will our budgets tank?

There’s no such thing as winners or losers when Irish families are struggling.

"I think most people are feeling worn down by the push and pull of politics and international unrest at this point (as I am)."

After months of speculation, tomorrow the Minister for Finance will announce Budget 2026.

You might be distracted by the Presidential campaigns or be feeling just pure withered by it all. 

I think most people are feeling worn down by the push and pull of politics and international unrest at this point (as I am).

The Junior Certificate results will be delivered to tens of thousands of young people on Wednesday, the day after the budget announcements. 

This is normally a massive, good news story and takes up plenty of headlines through the day with beatific glowing faces in pictures.

As I’m a cynic, I believe this timing isn’t a coincidence; last year the Junior Cert results were released a week after the Budget. 

It provides the Government with an opportunity to deflect bad news, and I believe happy faces after tomorrow’s Budget announcements will be in short supply.

What exactly will the Budget change for Irish consumers?

My crystal ball remains murky, and no matter how many cups of tea I brew, I just see tea leaves not predictions. Until the Minister steps up tomorrow afternoon and starts his speech, I can only give you some educated guesses.

The previous temporary payments to help with paying our energy bills and one-off cost of living payments to families on low incomes are unlikely to be reinstated this year. 

Recent political debates and discussions have centred around increases to basic social protection payments, fuel allowance and how to help families most impacted by the cost of living. 

A second tier of child benefit has already been ruled out though, so this will probably take the form of an increase to the child support payment made to those in receipt of social protection.

There is a slight chance that there will be no increases to unemployment benefits but that has yet to be determined. 

Plus the fuel allowance or household benefit schemes may be extended or increased, which will help those depending on social welfare pay their energy bills this Winter.

Prior to its election, the Government had a promise of reducing the rate of VAT on hospitality from 13.5% to 9%. 

During Covid times the rate was reduced to 9% to help struggling hotels, pubs and restaurants but it returned to its normal level as hospitality began to experience an improvement. 

It’s also a measure that is unlikely to make a big difference to families living on a budget because those with less disposable income dine out less.

The Irish Fiscal Council research report published last week explained that historic VAT decreases have not been passed through to consumers consistently, particularly when it comes to hospitality. 

Also, if implemented, the knock-on effect will be felt elsewhere in society, as the Exchequer will obviously earn less on a 9% rate compared to 12.5%.

Potentially, changes to the VAT rate on shoes and clothing could make an impact.

Children’s shoes are subject to a zero rate of VAT, and the Revenue Commissioners apply this rate to shoes up to size 51/2. 

Growth spurts in children and teenagers continue well beyond age 12 and into secondary school and keeping teenagers in shoes is quite the financial undertaking. 

I should know! My 13-year-old is on his third pair of shoes this year thanks to growing like a weed over the summer holidays. Any changes to these rates would be welcome and offer meaningful relief to families.

Children’s clothing is only subject to zero percent VAT up to the age of 11. After this time, the standard rate applies. Even if school uniforms sized for children over 11 years of age attracted a zero rate of VAT, it could be beneficial to families.

There could be a small increase in the income tax credit, which may translate to an additional €1 or €2 per week per earner. 

Considering the cost of a weekly shop has risen by approximately €5 per €100 spent in the space of a year, that’s hardly going to make a dint in the family finances.

The rate of inflation is the elephant in the room here. Any tax reliefs or social welfare increases could be negated by rising energy and food costs. 

Remember the majority of the recent energy price increases haven’t been implemented yet, so won’t be reflected in the official measure of Irish Inflation; the Consumer Price Index compiled by the Central Statistics Office, currently sitting at 2%.

At the time of writing, that’s as much as I can tell you. I do know that there’s no such thing as winners or losers when Irish families across the financial spectrum are struggling. 

We will likely end tomorrow dreading the trickle down of further news as the Budget Bills are debated in the Oireachtas in the weeks ahead.

No matter what headline items we hear tomorrow, the benefits may not be implemented until January at the earliest. 

The Budget has to be discussed and voted upon, plus the hardworking staff in the Revenue Commissioners and Social Protection will have plenty of background work to do before the changes get passed on to consumers. For now, we wait.

REDMOND RECOMMENDS:

Following in from my article on fake social media profiles and websites, a reader got in touch to enquire whether “Orla & Fiona” was a fake or genuine Galway-based retailer. 

I’ve checked both the Facebook page and the website and much to my dismay, it’s another scam website.

Any readers who have bought from any of these scam operations thinking they were genuine Irish retailers, should contact their bank directly to see about chargebacks. 

I’ve recorded an explainer video on how to detect these websites that you can watch on the Irish Examiner Lifestyle Instagram account.

To help other readers, please comment below the video with the name of any scam website you’ve come across. Stay wary and spend wisely!