Budget 2026: The music won't stop like it did after the crash — but the tempo has changed

Tuesday's budget will be nowhere near the horror witnessed by the 'bailout babies' in 2008 and 2009 but it will be far more moderate than last year's election budget

A woman watches then finance minister Brian Cowen delivering Budget 2008. The people that Adam Maguire terms the 'bailout babies' have painful memories of two austerity budgets. File picture: Paul Sharp

If the skies overhead in the aftermath of Storm Amy seem clearer, that could be because of a lack of kites being flown. 

In recent years, when the constituent members of the Fianna Fáil-Fine Gael-Green Party government were keen to push one another aside and claim credit for budget measures, those ideas would be in the media from, at the latest, August. There was much good news to go around and everyone wanted to ensure their names were all over it.

This year, however, it has been noticeably quieter, a sign of the times. 

Of course, that is to be expected when the Government only expects to add to the budget the paltry sum of ... €9.4bn. That such an eye-watering figure is treated as basically an austerity budget is a sign of a number of things, not least the rise in the size of overall spending in Ireland.

In 2019, the last budget before the covid pandemic, the government of that time settled on a total voted expenditure package of €71.4bn across every government department. Last year, the voted expenditure was €105bn. This year’s will tip above €110bn. At some point, these billions will add up.

Over-reliance on corporate tax 

That growth is part of what has ministers worried because a chunk of it is built on unreliable corporate tax takes, of which the government is due to spend about half in 2026, with the other half being squirreled away in one of two funds.

But ministers, some of whom were in young adulthood the last time the music stopped, still bear those scars alongside what RTÉ journalist Adam Maguire’s book calls the “bailout babies”.

Fears about sustainability 

There are genuine fears across government about the sustainability of spending in areas like health, housing, and social protection as the world’s economies brace for turbulence in the coming years.

But at the same time, speak to ministers privately and they will argue that the package they will announce on Tuesday will be substantial and they are confused as to how it can be painted as anything close to an austerity budget. 

Those who were around then will remember the emergency budget of 2008 and the even more severe one delivered a year later on a grim night just two weeks before Christmas. 

This is not that. Not by any means. 

Nowhere near austerity  

There will be increased spending across the board, more money for services and hefty tax packages aimed at helping hospitality and construction businesses. But there won’t be the huge cost of living packages of recent years, no energy credits or double child benefit payments or one-off payments for those on disability payments.

One could cynically point to the fact that last year’s budget came just weeks before a general election and contained a huge array of payments and this year’s is the furthest we will be from an election for some time, if all goes to plan. And there is absolutely some truth in that. 

Any argument otherwise is naive, frankly.

Moderation is a keyword

The coalition last year had huge money at its disposal and an election to win at a time when people were struggling with inflation and the cost of living. Of course, it took steps to attempt to do both.

But that moderation has become the keyword of this year’s budget is also understandable. The size and scale of the population alone has grown massively in recent years and what will be referred to in coming days as ELS — existing levels of service — will run into the billions. 

The more current spending-heavy departments such as health have been told in recent weeks that they will have to make savings and efficiencies within their budgets as ministers look to end the days of massive supplementary budgets being handed over to ministers late in the year.

For those who can remember the actual austerity budgets, the idea of this year’s being anything similar is amusing, but the change of pace and focus for Paschal Donohoe and Jack Chambers does bear some attention. The music isn’t stopping this year, but the tempo has shifted.