ESRI recommends ‘tighter’ fiscal stance in Budget

ESRI Urges “Tighter” Budget Measures Amid Housing and Infrastructure Challenges

The Economic and Social Research Institute (ESRI) has called for a more cautious fiscal approach in next month’s Budget, while emphasising the need for targeted spending to tackle ongoing housing and infrastructure issues.

Budget 2026, due to be delivered on October 7th by Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers, includes a planned €9.4 billion package, comprising €7.9 billion in additional public spending and a €1.5 billion tax package.

In its latest quarterly economic commentary, the ESRI noted that the Irish economy remains robust, with steady growth in consumption, employment, and tax revenue. The recent EU-US tariff agreement has reduced uncertainty, though the new 15% US tariff marks a “deterioration” for certain export sectors, particularly pharmaceutical companies, affecting profits rather than employment or output.

The ESRI also revised its housing completion forecast to 35,000 units for 2025, but a slowdown in new commencements has led to a 2026 forecast of 36,000 units. Planning permissions are falling, signalling a weaker outlook beyond the forecast horizon.

Professor Alan Barrett said:

“Recent months have been marked by international economic volatility, highlighting the need for a tighter fiscal stance in Budget 2026.”

Dr Conor O’Toole added:

“Ireland’s economy is operating close to capacity. Spending must be carefully targeted and sequenced to address bottlenecks in housing and infrastructure.”

Earlier this month, the Irish Fiscal Advisory Council also recommended scaling back the planned €9.4 billion Budget package, warning that a more restrained approach would help avoid overheating and allow flexibility to respond to future downturns.

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