The Government recognises that the cost of doing business has been an issue for firms in recent years, arising from both the wider inflationary trends – particularly energy costs – as well as Government mandated changes in the form of improvements to working conditions across a range of areas. It is important to note that costs for firms, as measured through the CSO’s Wholesale Price Index, are declining, and are down 6.4% in the 12 months to December 2025. In addition, the wholesale electricity prices fell by 11.7% in the month to December 2025 and were 20.9% lower than December 2024.
Ireland’s acute energy affordability challenge is in part due to particular circumstances, for instance the country’s isolated geographic location and small market size. However, it also reflects similar underlying structural issues evident throughout much of the EU, including an overreliance on imported fossil fuels, low levels of investment in electricity infrastructure in recent decades, and insufficient cross-border interconnection.
Accordingly, measures advanced by Government to reduce energy costs and unlock greater decarbonisation of Irish industry and enterprise over the medium term include:
• Increased deployment of indigenous renewables, such as onshore wind and solar generation, and towards the end of this decade offshore wind.
• A once in a generation investment in our electricity grid during Price Review 6 in 2026-30, led by €3.5bn of new Government equity in EirGrid and ESBN.
• Development of further interconnection with neighbouring jurisdictions, including the 700MW Celtic Interconnector between East Cork and France.
• Implementation of the National Energy Demand Strategy, which aims to reduce aggregate demand during high price periods of constrained energy supply and increase consumption during times of abundant renewable energy supply.
Most recently the Government has taken action to address business costs – including SMEs – through the publication of the Action Plan on Competitiveness and Productivity, and the convening of the Cost of Business Advisory Forum, which are both commitments in the Programme for Government.
The focus of the Action Plan is on the key actions that can be taken to strengthen Ireland’s competitiveness and productivity which in turn will lead to improvements in our economic performance. The Action Plan was published on the 10th of September 2025 and reflects a whole-of-Government approach to domestic drivers of competitiveness, focusing on areas firmly within our domestic control. The Action Plan contains a total of 85 actions, across six themes.
The Action Plan also contains a number of actions in the area of sustainability and energy – acknowledging the impact that high energy costs can have on enterprise, including a review of electricity network tariffs and a review of supports and funding available to businesses for climate adaptation measures – to lower energy costs. The National Energy Affordability Taskforce was established was established in summer 2025, and works to identify relevant cost drivers within the Irish energy system and discern where long-term cost reductions can be achieved. Furthermore, the taskforce will develop measures to enhance energy affordability for households and businesses, ensuring that cost reductions take advantage of Ireland’s Green Transition.
The establishment of the Cost of Business Advisory Forum delivers on the commitment regarding supports for Small Business, Enterprise and Industries. The Forum is tripartite collaboration bringing together a broad section representative bodies spanning multiple sectors as well as the multinational corporations. The purpose is to jointly consider those issues that can lead to higher costs for businesses in Ireland, any associated regulatory or infrastructural issues that merit a changed approach, and those steps that could be taken to mitigate these issues. The second meeting of the Forum took place in July which focused on Energy Costs and discussions from this meeting will inform the Forum’s report to Government which is scheduled for H1 2026.
Budget 2026 was a pro-enterprise Budget and was framed in consideration of the Action Plan on Competitiveness and Productivity and the Programme for Government. Budget included a range of new tax measures, alongside changes to existing measures, to support the SME sector. These included:
• A reduction in the Hospitality VAT rate from 13.5% to 9%, which will be introduced from 1 July 2025. This reduction will apply specifically to food/catering and hairdressing and addresses concerns raised by the sector about business viability.
• The Employer PRSI threshold was increased to ensure that employers do not pay the higher rate of PRSI for full-time workers earning the minimum wage.
• The R&D Tax Credit was increased from 30% to 35%, with SMEs due to benefit proportionally more from this change than larger firms subject to the minimum effective tax rate. The increase in the first-year payment threshold, from €75,000 to €87,500, is also specifically intended to support SMEs.
• The Key Employee Engagement Programme (KEEP) was extended for a further three years. KEEP is a share option scheme aimed at helping SMEs to attract and retain skilled employees in a competitive market.
• The lifetime limit of the Revised Entrepreneur Relief was increased from €1m to €1.5m, which provides a significant potential benefit for scaling companies. The relief applies a CGT rate of 10% on gains from the disposal of chargeable business assets, a reduction on the standard rate of 33%.
I would strongly encourage any small business owners looking to avail of government support to consult the National Enterprise Hub which launched in 2024. This Enterprise Hub has been designed as an entry point to aid business owners find relevant supports and help for their business.
Key energy supports for businesses include, the Local Enterprise Office’s Energy Efficiency Grant which supports all aspects of sustainability project expenditure associated with the operation of an enterprise including replacing old equipment with a new energy efficient version, while the Business Energy Upgrades Scheme from the SEAI is a support scheme introduced to provide a range of supports to assist businesses to introduce energy efficient and renewable measures into their buildings.
