By Charlie Weston

Copyright independent

The Parliamentary Budget Office has also found that low, middle, and high-income households are all set to lose out from the Budget.

The analysis comes as Ministers Paschal Donohoe and Jack Chambers faced sharp criticism on RTÉ’s ‘Today With Claire Byrne Show’ from members of the public.

The callers included those from middle-class families, pensioners business owners and famers. They told the ministers they felt the Budget offered them no direct relief from high costs of living.

They also questioned why one sector of the economy got a Vat cut when consumers and other business sectors were being told there was a need for belt-tightening when it comes to the Exchequer finances.

An analysis by the Parliamentary Budget Office of the welfare changes and the freezing of the income tax bands and credits found that the full winding down of cost-of-living supports in Budget 2026 will significantly impact low-income households.

In the previous budget, €250 in energy credits were paid to all households, while there was also a double child benefit payment. These payments were not repeated in this Budget.

However, the Government did commit to keep the lower 9pc rate of Vat on electricity and gas bills until 2030.

Tuesday’s Budget also saw the fuel allowance increased for the first time in four years. It is going from €33 a week to €38 per week, effectively immediately.

Eligibility for the allowance is also being widened to include recipients of the Working Family Payment.

Despite these changes, the Parliamentary Budget Office said the withdrawal of cost-of-living measures will increase income poverty rates.

The poverty rate will rise to 12.6pc next year, it calculated.

The Parliamentary Budget Office describes itself an independent and specialist unit within the Houses of the Oireachtas Service that is a key source of economic and budgetary intelligence.

Its flash analysis said: “Our key finding highlights that the full winding down of cost-of-living supports in Budget 2026 will significantly impact low-income households, equivalent to an average decrease in annual income of 4.4pc for the poorest 10pc of households and 3.9pc for the next poorest 10pc, while middle-income households see a decrease of 1.3pc on average.”

It said the rise in the income poverty rates for the low-income households would be particularly felt by older people.

Child poverty would also rise, the Parliamentary Budget Office said.

The freeze on income tax bands and credits affects middle and high-income households, increasing the average tax rate from 22.5pc this year to 23.1pc next year, the research found.

Independent economist Austin Hughes said increased carbon taxes and increased excise duties on tobacco will boost headline inflation and weigh on spending power, he said.

At very least, the failure to index direct taxes is likely to boost wage demands through the year ahead, Mr Hughes said.

Meanwhile one of the largest childcare providers has described this week’s Budget as “flat and disappointing for childcare”.

Karen Clince, founder and CEO of Tigers Childcare, said the Government continues to ignore the sector’s deep staffing crisis while claiming progress on affordability and access.