Ireland’s leading independent economic think tank, the Economic and Social Research Institute (ESRI), has issued a critical post-budget assessment, warning that the Government’s €8.5 billion financial package will do little to reduce child poverty or protect vulnerable households from real-terms income erosion.
In its distributional analysis of Budget 2027, the research institute found that despite targeted welfare adjustments, policy measures will fail to lower the number of children living below the poverty line, which currently stands at approximately 200,000 nationwide.
Child Welfare Supports Fall Short of Poverty Reduction Thresholds
While the Government introduced increases to the Child Support Payment and Working Family Payment, ESRI researchers noted that these adjustments barely keep pace with projected price growth and wage dynamics.
According to ESRI Associate Research Professor Claire Keane, the structure of the spending package prioritizes broad-based tax reductions over deep, targeted welfare interventions required to lift low-income families out of consistent poverty.
“Increases to child-related social welfare payments are welcome, but when evaluated against general wage growth and living costs, they do not shift the needle on overall child poverty rates,” the analysis noted.
Distributional Impact Across Income Deciles
The ESRI’s modeling indicates a mixed outcome across income groups. While the lowest-income deciles will see modest baseline gains from the €10 weekly core welfare increase and targeted fuel allowances, these gains are heavily offset by the decision to phase out temporary universal energy credits.
Conversely, middle-income earners are the primary beneficiaries of direct tax policy shifts, including the €2,500 expansion of the higher 40% income tax band to €46,500 and reductions in Universal Social Charge (USC) rates. Higher-earning dual-income households will gain up to €1,500 annually, while lower-income households reliant strictly on state supports will see negligible shifts in their net purchasing power.
Disability and Living Cost Gaps
The assessment also highlighted gaps in disability support. While Budget 2027 introduced a new €500 cost-of-disability grant, the ESRI noted that eligibility remains restricted to individuals receiving long-term disability payments, leaving many vulnerable individuals without aid. Furthermore, researchers emphasized that the lump-sum payment falls far short of covering the true additional annual expenses incurred by people living with disabilities.
The ESRI concluded that while cumulative policy adjustments over recent years have generally tracked price inflation, they continue to lag behind broader wage growth, leaving the State’s most vulnerable citizens at risk of falling further behind.
