Donohoe in grim Budget ‘challenge' alert after €400 social welfare & €560 Child Benefit decision amid tariff job fears

The Irish Sun

3 days ago

BUDGET 2026 will cut €1,000 from each Irish workers pocket - with the government ruling out €400 once-off lump sums, €250 energy credits and €560 extra Child Benefit-eligible households.
The Minister for Finance played down October's budget spending as he admitted Ireland is facing into a "challenge" with Trump's threatened tariffs possibly making an impact in just a few weeks.
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Finance Minister Paschal Donohoe is hoping for a successful negotiation between the US and the EU on tariffs
Credit: EPA/OLIVIER MATTHYS
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Taoiseach Micheal Martin said uncertainty around tariffs is 'problematic' for Budget preparations
Credit: Cillian Sherlock/PA Wire
Minister Paschal Donhoe said the US slapping a 30 per cent tariff on the EU would impact job creation and result in worse levels of employment within the economy.
He said Ireland's finances are in "good condition" and he is confident the country can rise to the
Speaking to RTE's Morning Ireland, he said a trade agreement between the EU and US could be reached before tariffs take effect.
But he warned that although the cost of living is "so hard for so many", the current level of spending growth within the economy will have to bet cut.
READ MORE IN MONEY
He explained that current spending at eight per cent and nine per cent was when inflation was between five per cent and 10 per cent, adding the rate of increase of prices is now at around two per cent.
The Fine Gael TD made the admission after revealing Budget 2026 will more "more normal" than last years, which contained a
He said
the €2.2billion spent on these measures last year may be needed to protect public services
and keep public finances safe.
It is understood that boosts worth up to €1,000 per worker have been dropped from plans for Budget 2026.
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Government leaders have agreed on the complete elimination of one-off payments such as energy credits, double welfare and Child Benefit double boosts.
The one-off cash boosts have benefited the average worker by about €1,000 each.
In their general election manifesto,
promised to increase all core welfare payments by €12 annually while
committed to increasing the
to €350 over the lifetime of the government.
But promises may not go ahead, depending on the impact of severe tariffs.
Taoiseach Micheal Martin yesterday said uncertainty around tariffs is 'problematic' for Budget preparations and medium-term fiscal planning.
He said: "We're keeping everything under review, but in context of this year, we have fair ideas to where revenue will land and where expenditure will land.
'But certainly we're waiting in terms of the midterm framework, the five year programme that has to be submitted to Europe, it is problematic.
'We can't abolish the Budgetary process, we still have to go and prepare the budget, and we have to prepare estimates, and there has to be negotiations and so on.
'And there are very significant downside risks given what's happening and in terms of the tariff threat.
'Potentially, if we've got it resolved it could be an upside, we'll have to wait and see."
Yes, the cost of living is still high. I know it's a huge challenge for so many, but we don't have the inflation levels that we had for so many years that necessitated spending billions of euro."
Finance Minister Paschal Donohoe
Last year's Budget package included two double
payments handed out before Christmas, €400 extra for carers, €300 for those on
.
It also included
an additional October cost-of-living double payment as well as the usual social welfare Christmas bonus.
In Budget 2024, a €250 energy credit paid out over two instalments was handed to every household across Ireland - but a similar payment looks set to be cut from October's budget.
previously told the Irish Sun
: "We have said we're going to move away from one off temporary measures.
WHAT WAS BUDGET 2025'S COST OF 'LIVING PACKAGE'?
THE last budget, which was announced in October, saw thousands of families across the country benefit from cost-of-living measures.
The package, which was worth €2.6 billion in total, was the largest social welfare package in the history of the State.
It was made up of a mixture of increased payments and once-off lump sums for
Other measures in Budget 2025 included an expenditure of €6.9billion and €1.4billion in tax changes.
Energy credits were also agreed as part of a €2.2 billion cost-of-living package included in
'I think when we're making decisions we have to consider them in the context of the overall fiscal parameters that we've set out.
'And in that context, there are lots of ways we can support families in the context of fuel poverty or higher energy bills and that will be considered in the round in addition to the overall capital investment in our energy system some of which will be central to the National Development Plan process that will help mitigate some of the otherwise increasing costs as part of any increase in energy bills.'
Calls have been made for a
to monthly Child Benefit cash in Budget 2025
- but the government have ruled out a payment rise for every single parent.
The State have also ruled out a repeat of last year's one-off €280 cash boosts handed out to those eligible for Child Benefit.
Instead, Minister for Social Protection Dara Calleary said that his department is "working on" a targeted form of the payment which would allow those who are most vulnerable to top-up on the existing €140-a-month cash.
The €140 flat payment would still be paid to everyone, regardless of income.
Last year, 1.4 million people benefited from
It included
€400 for those on the Disability Support Grant or Working
Payment, and a €300 lump sum payment for Fuel Allowance-eligible households.
WHO BENEFITED FROM DOUBLE PAYMENT?
THE double payment was given to those receiving the Back to Education Allowance, Back to Work Enterprise Allowance and the Back to Work Family Dividend.
Carers and those with
who receive social welfare benefits such as the Blind Pension, Carer's Allowance and Carer's Benefit also got the double boost.
But Minister Donohoe warned that the record Social Protection package including 10 lump sum payments
He said: "Yes, the cost of living is still high. I know it's a huge challenge for so many, but we don't have the inflation levels - the five per cent and 10 per cent - that we had for so many years that necessitated spending billions of euro to help offset prices going up.
"And it is correct, therefore, to say at this point in time that we can't repeat those kind of measures again and we will need to make sure that we have the enhanced strength in our economy and in our public finances to deal with the kind of risks that we're outlining."
JOB LOSS FEARS
Speaking to RTE this morning, Minister Donohoe said the amount of investment and jobs within Ireland's economy continues to be "very positive".
But he said employers and investors are "pausing" decisions due to the level economic uncertainty currently facing the country.
The minister said the forecast excluding the impact of 30 per cent tariffs still shows a high level of employment growth within the economy but he said the number of jobs being created are growing at a small pace.
If Ireland is slapped with the 30 per cent tariffs, Donohoe said it is important to be honest that the impact on job creation and levels of employment will be worse.
He said: "This is a big challenge, we need to have a moment of recognition of that, but we have faced challenges before and we will get through this one too."
SOCIAL WELFARE CASH FREEZE
Social Justice Ireland has called for the payment rate of jobseekers aged 18 to 24 to be increased to the full adult rate.
But Tanaiste
ndicated that the Government may
at its current level instead of including it in any social welfare increases in the upcoming budget.
Warning that there is "only so much money in the pot", he previously told us: "I do always think there is merit in not looking at social welfare payments with uniformity across the board.
'We've been talking a lot about college fees the last couple of days unexpectedly perhaps but roughly speaking the equivalent of €1.20 or €1.25 on every social welfare payment is roughly the equivalent of reducing the college fees by €1,000.
Business group IBEC earlier this week urged the government to take a "measured and strategic" approach to the budget later this year.
It said a €3 billion package - including €1.3 billion in additional infrastructure spending under the National Development Plan - is "appropriate for Budget 2026".
The lobby group warned that tariffs "post a serious threat to Irish business" and said the economic model Ireland has relied on for the past five decades is under serious strain.
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US President Donald Trump threatened to impose a 30 per cent tariff on EU imports from August 1
Credit: REUTERS/Umit Bektas/File Photo