How does the UK budget affect Ireland (on both sides of the border)?

When Rachel Reeves delivered her second budget as UK chancellor on Wednesday, 26 November, the reverberations were felt far beyond Westminster. For Ireland, the implications of Reeves’ fiscal choices strike at the heart of shared economic ecosystems, from Northern Ireland’s family farms to Dublin’s financial services sector, and from betting shops in border towns to the calculations of multinational corporations weighing where to base their European operations.

The budget arrived amid what observers have characterised as one of the most chaotic periods in recent British political memory. As Dominic McGrath noted in The Business Post, “the lead-up saw every twist, turn and tax policy leaked or briefed out, while a bait-and-switch approach to an income tax U-turn left bond markets flustered and allies confused” [1]. The resulting package — £26 billion in tax increases, though less than the feared £40 billion — represents not merely a set of fiscal adjustments but a fundamental recalibration of the UK’s economic direction with profound cross-border consequences.

Northern Ireland

For Northern Ireland, the budget’s impact feels particularly acute. Chartered Accountants Ireland, representing over 5,500 members in the region, has voiced deep concern about proposed changes to agricultural property relief and business property relief, set to take effect in April 2026. As Leontia Doran, UK Tax Manager with the organisation, explained: “These changes are disappointing and particularly damaging in Northern Ireland where family-owned businesses and farms are the heartbeat of the economy. Eighty-four per cent of businesses here are either family owned or managed, and they support over 325,000 jobs.” [2]

The proposed changes have already sent shockwaves through Northern Ireland’s farming community. Doran argues that “a carve-out is needed to exempt genuine farming activity and protect family-owned businesses in NI,” suggesting the government could have included a threshold to continue providing smaller farms and businesses with full relief if their farming or business assets comprise a minimum proportion of their overall estate [3]. The absence of such provisions, combined with a lack of transitional measures to protect older taxpayers, threatens to fundamentally alter the economic landscape of a region where family enterprises form the bedrock of employment and community life.

Both sides of the border

Beyond the farm gate, Reeves’ decision to freeze income tax and National Insurance Contributions thresholds until 2031 presents another concern for workers on both sides of the border. This continuation of the freeze, Doran noted, “is having an ever-increasing effect on people’s net after tax income and is expected to bring many more taxpayers into the higher rate tax bracket by 2030/31, a phenomenon known as ‘fiscal drag'” [4]. The policy risks creating a stagnant labour market whilst reducing household spending power, effects that will inevitably spill over into cross-border commerce and consumer behaviour.

Perhaps most significantly for Ireland’s strategic interests, Chartered Accountants Ireland has been campaigning for a reduced rate of corporation tax in Northern Ireland, more closely aligned with rates across the rest of the island. As Doran concluded: “A reduction in this rate would in the longer run ultimately increase tax take by driving the creation of better jobs and incentivising business growth. Add to this higher value FDI and the gains for Northern Ireland would set a real benchmark for what can be achieved with ambitious tax policies” [5]. The budget’s silence on this issue represents a missed opportunity to unlock the region’s potential, particularly its unique dual market access.

The business community’s response to the budget reveals the complex calculus facing firms operating across both jurisdictions. Noel McDonald and Donata Berger, founders of organic food company Biona, articulated a fundamental tension in how businesses are perceived and treated. McDonald argued: “The message that I would like to see coming out from government is that business is the only organisation in the country, in the economy, that generates wealth. Everything else is about spending the wealth, but the business is the only thing that generates wealth.” [6]

Berger pointed to the practical consequences of Labour’s approach: “This National Insurance contribution is massive for supermarkets. What does it lead to? People are cutting down on staff. They’re rationalising. Automation will be driven hugely. They should be doing more to support businesses. I think punishing businesses to the point that they have to shut down, and then you have a lot of people unemployed, that doesn’t move the country forward.” [7]

Irish companies with UK ops

For Ireland-headquartered firms with significant UK operations, the budget presented a mixed picture. Dalton Philips, chief executive of Greencore, struck a relatively sanguine note despite acknowledging challenges: “We’ve dealt with heavy levels of inflation. If you think through 2022/23 the level of inflation was materially greater than what we’re having to face now, and we were able to manage through that. We’ve got structural tailwinds in our business” [8]. His confidence rests on trends towards premiumisation, convenience, and eating in, all underpinned by UK population growth of approximately one per cent annually.

Yet the cumulative burden of fiscal tightening cannot be dismissed. Neil Hosty, chief executive of Fexco, acknowledged: “We’ve experienced it as an employer, for sure, we try to support our employees, to make sure that we’re keeping pace with wage inflation and trying to help them offset price inflation. National Insurance last year would be great example. And sometimes you just have to absorb those” [9]. His longer-term optimism about Britain’s entrepreneurial spirit cannot entirely mask the short-term pain his comments reveal.

Betting big?

The gambling sector, dominated by Irish firms like Flutter and BoyleSports, faced particularly sharp changes. From April 2026, remote gaming duty will increase from 21 per cent to 40 per cent, whilst a new tax rate of 25 per cent for general bets made remotely will come into force in April 2027 [10]. Flutter announced the changes would hit adjusted earnings by $860 million over two years, though the company believes it can mitigate costs and potentially increase market share as smaller competitors struggle. [11]

BoyleSports chief executive Vlad Kaltenieks had previously warned that tax increases would create “a more difficult environment” for the firm’s £100 million investment in new retail stores across Britain [12]. His concerns proved partially justified, though the decision to spare high-street bookmakers from additional levies offered some relief. Kevin Harrington, Flutter’s chief executive for UK and Ireland, called the changes “very disappointing,” warning they would “hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight.” [13]

Grand narrative

From a strategic perspective, Cillian Molloy, policy manager at the British Irish Chamber of Commerce, articulated what many business leaders were thinking: “For that partnership to flourish, the chamber believes the budget must prioritise policies that restore economic stability, promote business confidence, and deepen trading links with our nearest neighbours and our largest market, the European Union. Businesses on both sides of the Irish Sea need predictable regulatory and tax frameworks.” [14]

McGrath’s assessment of the budget itself was measured but pointed: “Rather than a Mario Draghi-esque ‘whatever it takes’ moment for Reeves, it was hard to escape a sense it came closer to ‘will this do?'” [15] He noted that despite creating a £22 billion fiscal buffer, “UK finances still remain highly susceptible to economic shocks,” with borrowing remaining high for the next three years and back-loaded tax rises and spending curbs only arriving at the end of the decade — conveniently timed around the next election. [16]

Advantage Ireland

For Ireland, one unexpected silver lining emerged from Britain’s fiscal troubles. Alan Murray, a tax partner at Forvis Mazars, suggested that “Ireland now has a ‘massive advantage’ over the UK in attracting ultra-high-net-worth individuals” following Keir Starmer’s decision to scrap the UK’s non-dom regime [17]. However, Murray warned that chronic infrastructure problems — housing shortages, inadequate transport links, school capacity — prevent Ireland from capitalising on this opportunity. As he put it: “If you leave the city centre of Dublin at 4pm on a Friday, and you try and get to Dublin Airport, good luck to you.” [18]

Implications

The broader implications of Reeves’ budget extend beyond immediate fiscal impacts. Elliott Jordan-Doak, a senior economist at Pantheon Macroeconomics, offered a sobering assessment: “Despite the positive spin from the chancellor today, the fiscal outlook remains perilous. The path of least resistance will continue to be to borrow more in the short-term and backload corrective action, until the bond market forces a change. Accordingly, we expect gilt yields to remain elevated.” [19]

For Irish business leaders and policymakers watching from across the Irish Sea, the message is that Britain’s economic instability represents both challenge and opportunity. The challenge lies in navigating the immediate impacts of tax rises, threshold freezes, and sectoral levies on firms operating in both markets. The opportunity lies in positioning Ireland as a stable, attractive alternative for investment and talent, if only the infrastructure can be put in place to support it.

As McGrath concluded, “it’s hard not to conclude that Reeves may only have pushed her problems onto the next budget” [20]. For Ireland, that means continued uncertainty about its largest trading partner’s direction, ongoing concerns about Northern Ireland’s economic trajectory, and difficult questions about how best to press home competitive advantages whilst maintaining the close bilateral relationship that has historically served both nations well. In an interconnected economy, no budget is truly domestic, and Britain’s fiscal choices will continue to shape Ireland’s economic landscape.