Budget 2025: A Closer Look at Implications for Businesses
Budget 2025 has delivered a significant boost for workers and households, addressing the cost-of-living crisis. However, the implications for businesses are more nuanced. While some sectors will benefit, others face challenges.
Key Measures for Workers
Tax Cuts: Increased tax thresholds and reduced USC rates will put more money in workers' pockets.
Minimum Wage Increase: The minimum wage will rise to €13.50 per hour.
Social Welfare: Increased social welfare payments and the extension of the Working Family Payment provide additional support.
Pension Auto-Enrolment: Starting from September 2025, employers and eligible employees will be required to contribute to a pension.
Key Measures for Businesses
Tax Incentives and Reliefs
Tax Participation Exemption: Simplifies double taxation relief for multinational corporations.
VAT Threshold Increase: Benefits small businesses by reducing administrative burdens.
Increased Spending on Upskilling: Supports SMEs through the National Training Fund.
Enhanced Entrepreneur Supports: Expanded tax reliefs for angel investors, EII scheme, SURE, and R&D tax credit.
Film and Audio-Visual Tax Credits: New and enhanced incentives to boost the industry.
Agricultural Tax Reliefs: Extensions and improvements to support the farming sector.
Infrastructure Investment
€3 Billion Investment: Allocated for housing, energy, water, and transport infrastructure.
Green Initiatives: Increased carbon tax, VAT reduction on heat pumps, and electric vehicle charging incentives.
Challenges and Considerations for Businesses
Rising Costs
Labor Costs: The minimum wage increase and pension auto-enrolment will add to labor costs.
Energy Costs: While some measures have been introduced to support energy efficiency, businesses may still face rising energy bills.
Supply Chain Disruptions: Global supply chain issues and geopolitical tensions could impact businesses' operations and costs.
Regulatory Burden
Administrative Costs: Increased regulatory requirements, such as those related to data privacy and environmental sustainability, can add to administrative burdens.
Compliance Costs: Businesses must invest in compliance systems and processes to meet regulatory obligations.
Economic Uncertainty
Inflation: While inflation has been easing, the risk of renewed inflationary pressures remains.
Interest Rate Hikes: Central banks may continue to raise interest rates to combat inflation, which could impact borrowing costs for businesses.
Recession Risk: The global economic outlook remains uncertain, with the potential for a recession in some regions.
Sector-Specific Implications
Hospitality: The industry faces challenges from rising labour costs, energy costs, and increased competition.
Retail: E-commerce continues to grow, putting pressure on traditional retail businesses.
Technology: The sector benefits from increased investment in digital infrastructure and R&D.
Manufacturing: Global supply chain disruptions and rising input costs pose challenges to the manufacturing sector.
Strategies for Businesses
Cost Management: Implement cost-cutting measures, such as optimizing operations, negotiating with suppliers, and improving energy efficiency.
Digital Transformation: Embrace digital technologies to improve productivity, reduce costs, and enhance customer experience.
Talent Management: Invest in employee training and development to attract and retain top talent.
Risk Management: Develop robust risk management strategies to mitigate potential risks, such as cyberattacks and supply chain disruptions.
Government Support: Take advantage of government support programs, such as grants, loans, and tax incentives.
Collaboration: Collaborate with other businesses, industry associations, and government agencies to address common challenges.
While Budget 2025 offers some positive measures for businesses, it's essential to assess the overall impact on individual sectors. While some industries may benefit from tax incentives and increased consumer spending, others may face challenges due to rising costs and regulatory changes.
Businesses should carefully analyse the specific implications of the Budget for their operations and financial performance. Adapting to the evolving economic landscape and making informed decisions will be crucial for long-term success.
If you would like any further information or support on Budget 2025 and it’s impact on your business please get in touch.