The Irish government announced its 2026 Budget on 7 October 2025. The Budget is built on three priorities: ramping up investment in vital infrastructure that will boost productivity, protect jobs, and support long-term growth; making improvements to public services to ensure that they are reliable, accessible, and efficient, and strengthening economic foundations to weather future uncertainties. The 2026 Budget includes a total expenditure of €116.8bn ($127.3bn), marking a 7.5% increase compared to the expenditure of €108.7bn announced in the 2025 Budget. The 2026 Budget includes a current expenditure of €97.7bn and a capital expenditure of €19.1bn.
The capital expenditure allocation for 2026 marks an increase of €2bn from that in the 2025 Budget. Of the total capital expenditure earmarked for 2026, €7.2bn is allocated to the Department of Housing, Local Government and Heritage; €3.4bn to the Department of Transport; €1.60bn to the Department of Education and Youth; and €1.56bn to the Department of Health. The latest budget includes significant allocations for building thousands of new social homes; building major water infrastructure projects and flood relief schemes, further developing sustainability and resilience in the nation’s electricity grid and boosting electricity supply; major projects across the transport, health, education, justice, arts, and sport sectors are also included.
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The budget includes an overall expenditure of €11.3bn for the Department of Housing, Local Government and Heritage, 64.3% of which is allocated for capital expenditure. Some of the major allocations announced for this department include:
- €2.9bn to support the delivery of new-build social homes and the second-hand acquisitions programme.
- €1.2bn for the starter homes programme to deliver starter homes through a range of affordability supports, alongside the Help to Buy initiative.
- €300m to support the regeneration of towns and urban areas through the Urban Regeneration Development Fund.
- €205m or a new housing activation infrastructure fund to support the work of the new Housing Activation Office.
These investments, along with the government’s latest real-estate-focused tax measures that were announced in the 2026 Budget, are expected to address the country’s current housing shortage issue. The government has reduced the VAT rate on the sale of new apartments from 13.5% to 9%, effective from 8 October 2025; this will be applicable until 31 December 2030. Additionally, the government has announced that the Residential Development Stamp Duty Refund Scheme (where nonresidential land is subsequently developed for residential purposes) will be extended to 31 December 2030.
The budget includes an overall allocation of €4.7bn for the transport department, with 72.3% of it allocated for capital expenditure. The funding is allocated for public transport, road safety, civil aviation, maritime services, active travel, and the Irish Coast Guard projects, among others. Some of the significant allocations include funding for the:
- Maintenance and repair of national, regional, and local roads.
- Funding to continue major road projects such as the M50 Traffic Control and Management upgrade in Dublin, N5 Ballaghaderreen to Scramoge works in Roscommon, M28 Cork to Ringaskiddy and N21/69 Limerick to Foynes works in Limerick.
- Funding for 90 new electric vehicle recharging hubs and 192 new fast (100kW-plus) recharging points across Ireland’s national primary and secondary roads.
- Rollout of the Dublin Area Rapid Transit+ Programme (which is an expansion of the DART electric rail network across the Greater Dublin Area), and Bus Connects Programmes in Dublin and Ireland’s regional cities, including the construction of two Core Bus Corridors in Dublin.
- Construction of the Cork Area Commuter Rail first phase and the Enterprise fleet replacement project.
- Construction of walking and cycling infrastructure projects across all local authorities, including Greenway sections and Safe Routes to School projects.
Water, energy, health, and education are other priority areas listed in the 2026 Budget. Some of the significant allocations include:
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By GlobalData- Funding of €3.5bn to strengthen energy security and accelerate the transition to renewable energy.
- €1.4bn to continue with the construction of essential capacity to support new housing developments and increase the resilience and sustainability of water supply; this will help to further progress development of waste treatment plants across the country.
- €558m in carbon tax revenue for residential and community energy upgrade schemes.
- Funding for increasing acute hospital capacity and expanding diagnostic services.
- Funding for the community nursing units’ refurbishment programme and reductions in community waiting lists.
- Funding to deliver more than 300 school building projects, with the majority of these expected to be completed in 2026 and 2027.
As part of the 2026 Budget, the government expects real gross domestic product to grow by 1% in 2026. The government projects the strong momentum in consumer spending to continue into 2026, with household incomes benefitting from factors such as gains in real wages, and continued increases in employment. The outlook for capital spending, however, is mixed. The outlook is positive on the building and construction side, supported by the government’s updated National Development Plan, which provides increased public capital spending in critical infrastructure over the medium-term. Conversely, the outlook for spending on machinery and equipment, is less positive. This is due to normalisation of activity from the volatile levels seen in recent years, coupled with the anticipated dampening effects associated with elevated uncertainty. Export-oriented companies are expected to have paused or postponed some capital investments, with these decisions feeding into aggregate activity with a lag. The updated National Development Plan, which was published in July 2025, includes a total investment of €275.4bn over the period 2026-2035. Of the total, €36bn will be allocated to the housing sector, €22.3bn to the transport sector, €9.3bn to the health sector, €7.6bn to the education sector, and €5.6bn to the climate, environment, and energy sector.
While global tailwinds persist, impacting Ireland’s wider economy and construction industry, this budget looks to strengthen the economic and construction outlook, giving a more positive foothold for businesses, investors, and other stakeholders in the construction sector to develop actionable plans, to maximise the benefits.
