Budget 2026: The public sector perspective
Budget 2025 injected record capital investment – €15bn for homes, schools, hospitals and broadband – but the public sector faces significant pressure in delivering these projects efficiently and effectively. The projected spending for Budget 2026 is in the region of €7.9bn in extra Government spending, €5.9bn of that relating to increased spending on existing services (wages, operations and projects, and services) and €2bn on capital investment.
With expenditure projected to rise, public sector bodies can expect to see an increase in their operating budgets. However, pressure on pay costs and capacity will continue to be a big factor.
Even with increased public spending, public sector bodies will be operating in an uncertain and constrained environment, balancing increases in funding with significant delivery and regulatory barriers to service improvements.
For instance, a recent taskforce report highlights that bureaucratic delays, rising judicial reviews (+20%), and unclear project prioritisation threaten progress under the National Development Plan.
Persistent underfunding in higher education also undermines capacity. Although the government committed some funding, it's well below the promised €307m per year, raising concerns over staffing, reliance on precarious contracts, and research limitations.
Meanwhile, public pay pressures loom large during this budget cycle. The next multi-year pay deal (due 2027) could drive annual public sector wage costs from €555m to €1.66bn – a significant strain on public finances.
The focus for the public sector over the course of the coming year is to work to build capacity, efficiency and effectiveness through innovative organisational transformation, use of technology, and increased rollout of shared and integrated Government services.
Key points:
- The public sector should see net growth in resources in 2026 – for both operating costs and new projects and investments
- This investment will likely be targeted at priority areas (for instance those indicated in the updated National Development Plan): infrastructure, transport, energy and water, as well as targeted investment in core sectors like healthcare, and education, with sustainability as a consideration for all expenditure
- Investment will need to be carefully balanced against rising operating costs, increased expectations on delivery, and the need to innovate and drive improvement in the public service
Our Budget 2026 webinar, featuring leading economic analyst and commentator Jim Power along with a panel of Crowe Ireland experts moderated by tax partner Claire Davey, is now available to view on demand. Click here to to find out more about what Budget 2026 means for business owners across all sectors.
