ISME, the Irish SME Association, has warned that Budget 2026 must deliver an ambitious new direction for Ireland’s indigenous enterprise base, saying the Government is “sleepwalking into economic peril” by continuing to rely so heavily on multinational corporation tax receipts.
With the US economy under self-inflicted severe strain, and bond markets signalling fiscal stress in both France and the UK, ISME says Ireland cannot continue with “incremental change” when our nearest trading partners are in difficulty.
ISME highlights that Ireland already spends heavily on enterprise supports, but much of it is captured by large foreign companies. Among the issues ISME are highlighting include that R&D tax credits are concentrated in multinationals, with limited impact on SMEs. It also says the KEEP (Key Employee Engagement Programme) is overregulated and failing, leaving domestic firms unable to retain skilled staff against multinational employers. €1.5 billion sits idle in bank deposits that ISME say could be channelled into SME capitalisation via an Irish version of the UK’s ISA.
Meanwhile, the association warns that SME credit continues to fall in retail, hospitality and construction due to cost pressures and excessive risk.
Neil McDonnell, Chief Executive of ISME, said: “If we want to scale our indigenous enterprise base, then Budget 2026 needs to set out bold, measurable goals for Irish business. Ministers Donohoe, Chambers, Browne and Burke should be setting ambitions and goals for their departments, in the spirit of Ardnacrusha or Whitaker’s Programme for Economic Expansion.”
In its Pre-Budget submission, released in May this year, ISME made a number of recommendations to address this imbalance favouring large multinational businesses over Irish SMEs. These included:
- Business Costs – A reset on the national minimum wage calculation, legal reforms to deter vexatious lawsuits, and the reintroduction of the insurance ‘Blue Book’ to improve market transparency.
- Indigenous Enterprise Policy – Targeted tax reliefs for Irish entrepreneurs, a reduction in VAT thresholds for exporters, and formal SME representation on the Labour Employer Economic Forum (LEEF).
- Skills and Training – National Training Fund resources to be redirected towards lifelong learning and upskilling and a new ‘Blue Cert’ in business management aimed at SME owners and managers.
- Public Finances – ISME cautions against funding permanent current spending with volatile corporation tax receipts. The submission proposes a standing Public Pay Commission, greater use of the Rainy Day Fund, and reforms to the PRSI system to ensure fair contributions.
- Housing – With housing now acting as a de facto business cost, ISME is calling for tax incentives to unlock rental supply, support for student accommodation, regeneration grants, and accelerated investment in water infrastructure to enable development.
ISME’s full Pre-Budget Submission can be found online – https://isme.ie/wp-content/uploads/2025/05/ISME-Pre-budget-Submission-2026.pdf
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