Mr. Gerard Brady:

I thank the Chair and the members of the committee for their time and for inviting IBEC in to speak on the pre-budget 2026 scrutiny. This budget on 7 October will be framed in the context of ongoing trade disruptions that have introduced a significant amount of volatility and noise into the global economy over recent months. However, the Irish economy has continued to show significant resilience through the first three quarters of 2025 despite the obvious challenges in the global environment. Domestic investment has broadly held up, consumer spending has continued to grow at a steady rate and employment has continued to expand despite the uncertainty.

Momentum coming into 2025 had been remarkably strong, as it had been for a number of years, but there are some signs of a slowdown in activity, particularly in the labour market. It is not a dramatic one, but it is a slowdown nonetheless. Our IBEC HR update, which surveys more than 400 HR directors and managers and was released in recent weeks, shows falling hiring expectations with the share of companies expecting to increase headcount in 2026 down to 37% from 41% this year and 42% in 2024. It is not a dramatic slowdown, but it is a slowdown nonetheless.

At the same time, a number of IBEC surveys have suggested there has been improved sentiment as the year has progressed. The IBEC CEO pulse for August showed that 34% of CEOs had a positive assessment of the environment for their own business over the coming six months, while only 28% saw that environment as more negative. This can be contrasted with March 2025, when only 15% saw a positive environment and 41% saw it as more negative. It is a remarkable increase in positivity. Two major themes emerged in the survey, which, to put it in context, shows more positivity and a bit more confidence but also some caution. First, 59% of companies said they were reviewing spending plans given the current environment, 28% were scenario planning for supply chain contingencies and 17% were reviewing the location of their global production.

Ireland cannot afford to be complacent as companies review their operations globally. To stay competitive and secure long-term prosperity, we must meet this moment with both vigilance and agility. Budget 2026 should strengthen Ireland’s agility in an increasingly challenging global climate while continuing to support productivity, future-proof public capital projects and build fiscal resilience. While the broader economy may remain resilient, some sectors will suffer significant and lasting damage to competitiveness as a result of tariffs. These businesses and their employees should receive targeted support to diversify, build new markets, build productivity and train, where needed.

The One Big Beautiful Act in the US, that is, the new tax legislation, and ongoing global negotiations around the future of pillar 2 of the OECD corporate tax rules increase the potential for both upward and downward volatility in global corporate tax and poses a competitive risk for Ireland. At the same time, there is much greater market scrutiny of the fiscal position of countries. This is seen particularly in long-term bond yields in the UK, France, the US and elsewhere. We cannot afford to be vulnerable if those risks materialise in Ireland.

There are also major opportunities on the horizon, including the digital and AI revolutions. To capitalise on these, Ireland needs not only strategic vision, but timely delivery in areas like infrastructure, innovation and skills. These investments in our future should take priority over all current spending or tax cuts. We must go much further on skills and innovation in particular. Ireland still falls short of where it needs to be if it is to be an innovation leader and research and development performer. We must also use the tools available to attract investment. Enhancing the research and development tax credit is one such lever. Widening its scope to support all forms of innovation and to support global collaboration would provide a timely and material response to current investment challenges.

It is very encouraging to see many of IBEC's recommendations reflected in the new Government action plan on competitiveness and productivity. It can be a very positive and important step toward future-proofing Ireland’s economic model in a time of global change but budget 2026 must provide the resources needed to underpin that action plan and that ambition for it to be worth the paper it is written on.

IBEC's key business priorities for budget 2026 fall into four categories. With regard to supporting innovation and research and development, we are looking for: a significant enhancement of the research and development tax credits; follow-through on the commitments in the national development plan to fund research infrastructure like labs and equipment; and follow-through on commitments in the action plan on competitiveness and productivity through giving a significant funding uplift to public investment in innovation. With regard to infrastructure, the budget should underpin the new NDP with multi-annual funding for key delivery bodies and fund critical underpinning infrastructure such as water and the electricity grid. To deliver critical skills, the budget should fund Skillnet Ireland business networks, look at a national training voucher scheme and deliver sustainable funding to an integrated apprenticeship system and the further and higher education system. Finally, for those who are most impacted by cost competitiveness and economic uncertainty, the budget should: support sectors worst impacted by tariffs to build new markets and to invest in skills and capital deepening through specific and targeted supports; support dislocated workers through the training system and the National Training Fund surplus; and support cost competitiveness for all companies, particularly in areas such as energy and labour costs.