Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Ireland
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Ireland, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, environmental policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 3.6.2026  COM(2026) 207 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Ireland {SWD(2026) 207 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Ireland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(2) and Article 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29 April 2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No  1466/97  (1),  and  in 
particular Article 3(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

(1) 

(2) 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  preventing  excessive  government  deficits.  The  Regulation  stipulates  that  the 
Council  and  the  Commission  conduct  multilateral  surveillance  in  the  context  of  the 
European Semester in accordance with the objectives and requirements set out in the 
Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  The  European  Semester 
includes, in  particular, the formulation and the surveillance of the implementation  of 
country-specific recommendations. 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (2). The proposal 

Regulation 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29 April 2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the  European 
Fund  for  economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime, 
prosperity  and  security  for  the  period  2028-2034  and  amending  Regulation  (EU)  2023/955  and 

(EC)  No 

2024/1263, 

30.4.2024, 

1466/97 

(OJ 

L, 

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(3) 

(4) 

(5) 

(6) 

aims to increase the effectiveness of Union funding by reducing the fragmentation of 
the  financial  architecture  and  to  support  Member  States’  in  the  coordination  of  their 
economic policy in line with Article 175 of the TFEU. 

On  25 November 2025,  the  Commission  adopted  an  opinion  on  the  2026  draft 
budgetary  plan  of  Ireland.  On  the  same  date,  on  the  basis  of  Regulation  (EU)  No 
1176/2011,  the  Commission  adopted  the  2026  Alert  Mechanism  Report,  in  which  it 
did  not  identify  Ireland  as  one  of  the  Member  States  for  which  an  in-depth  review 
would  be  needed.  The  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation  on  the  economic  policy  of  the  euro  area,  a  recommendation  for  a 
Council recommendation on human capital in the European Union, and a proposal for 
the  2026  Joint  Employment  Report,  which  analyses  the  implementation  of  the 
Employment  Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights. 
The Council adopted the Recommendation on the economic policy of the euro area (3) 
on  21 April 2026  and  the  Joint  Employment  Report  and  the  Recommendation  on 
human capital on 9 March 2026. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass,  ensuring  that  Member  States’  economic  policies  are  consistent  with  the 
Commission’s  strategic  objectives,  creating  a  unified  approach 
to  economic 
governance that fosters sustainable growth, innovation and resilience across the Union. 

In  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  the  Recovery  and  Resilience  Facility  (RRF) 
implementation (4). Recovery and resilience plans (RRPs), along with cohesion policy 
funding, have been essential for delivering on the policy priorities under the European 
Semester, as the plans were required to effectively address all or a significant subset of 
challenges identified in the relevant country-specific recommendations issued in recent 
cycles, and programmes funded by the European cohesion policy were required to take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  the  RRF,  in  particular  those  that  contribute  to  addressing 
challenges identified in the country-specific recommendations. 

in 

addressing 

Ireland’s  progress 

On  3 June 2026,  the  Commission  published  the  2026  country  report  for  Ireland.  It 
assessed 
country-specific 
recommendations and took stock of Ireland’s implementation of the RRP. On the basis 
of  that  analysis,  the  country  report  identified  the  most  pressing  challenges  Ireland  is 
facing.  It  also  assessed  Ireland’s  progress  in  implementing  the  European  Pillar  of 
Social Rights and in achieving the Union headline targets on employment, skills and 
poverty  reduction,  as  well  as  progress  in  achieving  the  United  Nations  Sustainable 
Development Goals.  

relevant 

the 

(3) 
(4) 

Regulation (EU, Euratom) 2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the 
subject of negotiations with the co-legislators.  
OJ C, C/2026/2434, 28 April 2026, ELI: http://data.europa.eu/eli/C/2026/2434/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
(OJ  L  57,  18.2.2021,  p.  17,  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj). 

the  Recovery  and  Resilience  Facility 

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(7) 

(8) 

(9) 

On  10 March 2026,  the  Council,  upon  the  assessment  and  recommendation  of  the 
Commission, adopted a Recommendation endorsing the national medium-term fiscal-
structural  plan  of  January  2026  of  Ireland  (5).  The  plan,  submitted  pursuant  to  Art. 
15(2) of Regulation (EU) 2024/1263, covers the period from 2026 until 2030 and sets 
a budgetary constraint in the form of a maximum net expenditure growth rate over five 
years.  The  Council  recommended  the  following  maximum  growth  rates  of  net 
expenditure:  6.6%  in  2026,  6.0%  in  2027,  7.6% in  2028,  6.7%  in  2029  and  6.4%  in 
2030,  which  correspond  to  the  maximum  cumulative  growth  rates  calculated  by 
reference to the base year of 2024 of 16.5% in 2026, 23.5% in 2027, 32.9% in 2028, 
41.7% 
the 
Recommendation of 21 January 2025 (6). However, the maximum growth rates of net 
expenditure  set  therein  for  the  year  2025,  namely  5.1%  annually  and  15.4% 
cumulatively by reference to the base year 2023, remain relevant to assess compliance 
until and including 2025. 

in  2030.  This  recommendation  superseded 

in  2029  and  50.9% 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential challenge for the European Union. The Commission invited Member States 
to request the activation of the national escape clause of the Stability and Growth Pact 
in  a  coordinated  manner  to  support  the  EU  efforts  to  achieve  a  rapid  and  significant 
increase  in  defence  spending  (7)  and  this  proposal  was  welcomed  by  the  European 
Council  of  6 March 2025.  Member  States  may  still  request  the  activation  of  the 
national escape clause at any time until 2028, if they fulfil the criteria set in Article 26 
of Regulation (EU) 2024/1263. 
On 30 April 2026, Ireland submitted its 2026 Annual Progress Report (8) on adherence 
to 
the 
the  recommended  maximum  growth  rates  of  net  expenditure  and 
implementation  of  reforms  and  investments  responding  to  the  main  challenges 
identified  in  the  European  Semester  country-specific  recommendations.  The  Annual 
Progress  Report  also  reflects  Ireland’s  biannual  reporting  on  the  progress  made  in 
implementing  its  recovery  and  resilience  plan  in  accordance  with  Article  27  of 
Regulation (EU) 2021/241. 

(10)  Real  GDP  growth  in  2025  was  12.3%  and  HICP  inflation  stood  at  2.1%.  The 
Commission Spring 2026 Forecast projects real GDP to decline by 1.2% in 2026 and 
to  grow by 3.4% in 2027, and HICP inflation to stand at 3.5% in  2026  and 2.6% in 
2027. 

(11)  Based  on  data  provided  by  Eurostat  (9),  Ireland’s  general  government  surplus 
decreased from  4.1% of  GDP in  2024 to 1.8% of GDP in  2025. The decrease in  the 
surplus in 2025 mainly reflects the absence of the high one-off revenue seen in 2024. 
Based on policy measures known by the cut-off date of the forecast, the Commission 
Spring 2026 Forecast projects a surplus of 1.4% of GDP in 2026 and 1.2% of GDP in 
2027.  The  decreases  in  the  surplus  in  2026  and 2027  mainly  reflect  a  moderation  in 

(5) 

(6) 

(7) 

(8) 

(9) 

Council Recommendation of 10 March 2026 endorsing the national medium-term fiscal-structural plan 
of Ireland (OJ C, C/2026/1812, 20 March 2026, ELI: http://data.europa.eu/eli/C/2026/1812/oj). 
Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of Ireland (OJ C, C/2025/667, 10 February 2025, ELI: https://eur-lex.europa.eu/eli/C/2025/667/oj). 
Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19 March 2025, C(2025)2000 final. 
The  2026  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en. 
Eurostat-Euro Indicators, 22 April 2026. 

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revenue  growth  and  strong  projected  increases  in  expenditure  on  public  sector  pay, 
social benefits and public investment. 

(12)  Based  on  the  Commission’s  estimates,  the  fiscal  stance  (10),  which  includes  both 
nationally and EU financed expenditure, was broadly neutral in 2025. It is projected to 
remain broadly neutral in both 2026 and 2027. 

(13)  Based on data provided by Eurostat (11), Ireland’s general government debt decreased 
from  38.3%  of  GDP  at  the  end  of  2024  to  32.9%  of  GDP  at  the  end  of  2025.  The 
decrease in the debt ratio in 2025 mainly reflects a strong real growth of the economy 
and  the  achieved  budgetary  surplus.  Based  on  policy  measures  known  at  the  cut-off 
date of the forecast,  the  Commission Spring 2026 Forecast  projects  the debt-to-GDP 
ratio to decrease to 32.4% by the end of 2026 and to further decrease to 31.6% by the 
end of 2027. 

(14)  Based  on  the  Commission  Spring  2026  Forecast,  total  general  government  defence 
expenditure  in  Ireland  amounted  to  0.2%  of  GDP  in  2025  and  it  is  projected  at  the 
same level in 2026. 

(15)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 
markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient. Since the outbreak of the war in the Middle East in February 2026, Ireland 
adopted  fiscal  policy  measures  to  mitigate  the  impact  of  high  energy  prices  on 
households and firms (12). These include an untargeted reduction in excise duties and 
the  National  Oil  Reserves  Agency  (NORA)  levy  until  July 2026,  a  deferral  of  the 
carbon tax increase until October 2026, targeted subsidies to the transport sector until 
May 2026 and to the agricultural sector until July 2026, and targeted social transfers to 
low-income  households  in  April 2026.  According  to  the  Commission  Spring  2026 
Forecast, the fiscal cost of these measures is projected to amount to 0.1% of GDP in 
2026. According to Commission estimates, if these measures were to remain in force 
until end-2026, their fiscal cost would amount to 0.3% of GDP in 2026. 

(16)  Based on the Commission’s calculations, net expenditure in Ireland grew by 6.7% in 
2025 and 15% cumulatively over 2024 and 2025. The net expenditure growth in 2025 
is  above  the  recommended  maximum  growth  rate  recommended  by  the  Council  in 
January 2025, corresponding to a deviation marginally above 0.3% of GDP in annual 
terms.  When  considering  2024  and  2025  together,  the  cumulative  growth  rate  of  net 
expenditure  is  below  the  recommended  maximum  growth  rate.  At  the  same  time,  as 
noted,  the  budgetary  position  for  2025  was  in  surplus,  and  general  government  debt 
was below 60% of GDP. 

(17)  Based  on  the  Commission’s  calculations,  net  expenditure  in  Ireland  is  projected  to 
grow  by  6.1%  in  2026,  and  13.2%  cumulatively  over  2025  and  2026.  The  projected 

(10) 

(11) 
(12) 

The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat-Euro Indicators, 22 April 2026. 
This reflects the situation at the cut-off date of the Commission Spring 2026 Forecast (4 May 2026). 

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net  expenditure  growth  in  2026  is  below  the  recommended  maximum  growth  rate 
recommended  by  the  Council  in  March 2026.  When  considering  2025  and  2026 
together,  the  projected  cumulative  growth  rate  of  net  expenditure  is  also  below  the 
recommended maximum growth rate. 

(18)  The  reliance  of  Ireland’s  government  revenue  on  corporate  taxation  from  foreign-
owned  multinational  enterprises  continues  to  pose  risks  to  the  stability  of  public 
finances. The exceptionally high corporate income tax (CIT) revenue is coming from a 
relatively few large companies in the pharmaceutical and ICT sectors and a substantial 
portion of receipts is estimated to be windfall, i.e. in excess of what can be explained 
by domestic economic activity. As a result, CIT revenue could be highly influenced by 
international  developments  such as  changes in  the  global trade  and tax  environment. 
The CIT related risks are compounded by the interlinkages between the corporate and 
personal income tax bases, as foreign-owned multinationals are also key contributors 
to  labour  earnings  and  subsequently  income  tax  revenue.  To  mitigate  fiscal  risks, 
Ireland is channelling a part of its windfall revenues to the Future Ireland Fund and the 
Infrastructure, Climate and Nature Fund to build up fiscal buffers. However, most of 
the remaining windfall revenues are to be spent according to Ireland’s Medium-Term 
Fiscal  Structural  Plan.  To  reduce  the  reliance  of  the  budget  on  potentially  transient 
revenue, Ireland would benefit from diversifying its budget revenue sources. 

(19)  Long-term fiscal sustainability risks  in healthcare remain. Health spending in Ireland 
continues to be among the highest in the EU despite its relatively young and healthy 
population.  Structural  inefficiencies,  such  as  the  system’s  heavy  reliance  on  costly 
hospital  care  and  the  limited  accessibility  of  primary  care,  pose  a  risk  to  fiscal 
sustainability.  This  is  exacerbated  by  the  increasing  demand  pressures  of  an  aging 
population.  Ireland  is  implementing  cost  containment  measures  in  healthcare  via  the 
Productivity  and  Savings  Taskforce;  however,  most  of  the  result  are  so  far  non-
permanent  and  did  not  prevent  budget  overrun  in  health  in  2025.  Moreover,  policy 
action  is  needed  to  accelerate  the  transition  towards  universal  primary  care  access, 
while tackling infrastructure constraints and doctor shortages. Ireland is implementing 
reforms  to  decentralise  the  delivery  of  healthcare,  however,  progress  in  expanding 
eligibility and improving overall accessibility of public primary care has been limited.  

(20)  The systematic, meaningful and timely involvement of local and regional authorities, 
social partners, civil society and other relevant stakeholders remains essential in order 
to  ensure broad ownership  for the successful implementation  of the Union’s funding 
instruments, as well as in the context of the European Semester. 

(21)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF) 
and the European Social Fund Plus (ESF+) in Ireland, is above the average pace at EU 
level, both in terms of project selection and payments. It is important to keep current 
momentum,  while  maximising  the  impact  of  investments  on  the  ground.  Ireland  is 
already taking action under its cohesion policy programmes to boost competitiveness 
and growth. At the same time, Ireland needs to accelerate implementation of the Just 
Transition  Fund  as  resources  are  due  for  disbursement  by  the  end  of  2026.  It  is 
essential  to  ensure  that  the  new  investments  identified  by  Ireland  in  its  mid-term 
review  of  the  cohesion  policy  funds,  notably  those  linked  to  the  five  priorities 

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(22) 

(23) 

identified  in  the  Mid-Term  Review  Regulation  (13),  are  deployed  rapidly  and 
effectively. 

Ireland  faces  several  challenges  related  to  productivity  of  the  domestic  economy, 
scaling-up funding for companies, limited direct retail investment, fossil fuel reliance, 
increasing  demand  from  high  energy  users,  energy  infrastructure,  energy  efficiency, 
sustainable  public  transport  and  the  availability  of  electric  charging  infrastructure. 
Ireland also faces challenges related to the implementation of sustainable agricultural 
practices,  shortcomings  affecting  water  quality,  water  leakages  and  wastewater 
treatment,  and  limited  progress  in  circularity  metrics  to  retain  material  value  in  the 
domestic  economy.  Lastly  Ireland  faces  challenges  related  to  homelessness  and 
affordable  and  social  housing,  capacity  constraints  in  local  authorities  to  deliver  on 
housing projects as well as in the residential construction sector, and the labour market 
and social inclusion of persons with disabilities and single parents.  

Ireland’s  strong  headline  productivity  is  largely  driven  by  foreign  multinationals, 
while  the  productivity  of  domestic  firms –  mostly  SMEs  –  lags  behind  foreign 
multinationals and EU peers. Strengthening domestic innovation capacity is crucial to 
build  a  more  balanced  and  resilient  economy,  which  is  especially  important  in  an 
evolving global landscape. Public R&D spending in Ireland is one of the lowest in the 
EU, accounting for only 0.2% of GDP (0.4% of GNI* (14)) and private R&D is highly 
concentrated in foreign-owned firms, with domestic SMEs underinvesting. Tax credits 
remain the main instrument of public support for private R&D in Ireland. While they 
are  an  important  instrument,  more  direct  funding  for  research  and  innovation  would 
better address  the needs  of  Irish SMEs. The  revised National  Development  Plan  and 
the  recently  published  Action  Plan  on  Competitiveness  and  Productivity  envisage 
increased funding and support for private and public R&D and innovation. However, 
full and timely implementation, along with sustained investment increases, are crucial 
to strengthen Ireland’s domestic innovation capacity. 

(24)  Despite  venture  capital  investment  being  broadly  in  line  with  the  EU  average,  Irish 
venture  capital  funds  are  typically  smaller  compared  to  European  counterparts, 
contributing to smaller deal sizes and a significant equity funding gap for Irish firms 
looking to scale-up. Addressing this scaling-up gap is crucial to prevent the relocation 
of  high-growth  firms  and  enhance  domestic  driven  growth.  While  state-sponsored 
initiatives have had some success in mobilising investment for start-ups and scale-ups, 
equity financing from institutional investors is limited. Promoting institutional investor 
participation,  particularly  pension  funds,  in  venture  capital  and  private  equity  can 
mobilise  capital  and  help  boost  investment  in  innovative  companies  and  support  the 
scaling up of companies. 

(25) 

Ireland  has  one  of  the  lowest  levels  of  direct  retail  participation  in  capital  markets 
within  the  EU.  This  is  largely  due  to  a  strong  preference  for  traditional  savings 
vehicles, such as  bank deposits,  insurance products  and pension assets. Additionally, 
tax  disincentives  and  the  lack  of  a  dedicated  Savings  and  Investment  account  have 
hindered  investment.  Recently,  policy  efforts  to  encourage  greater  household 
participation in capital markets have been intensifying. By facilitating increased direct 

(13) 

(14) 

Regulation (EU) 2025/1914 of the European Parliament and of the Council of 18 September 2025 
amending Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address 
strategic challenges in the context of the mid-term review. 
Modified gross national income (GNI*) excludes globalisation effects and reflects the income standards 
of Irish residents more accurately than GDP. 

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retail  investments,  households  can  expand  their  investment  opportunities,  and  their 
savings  can  be  channelled  towards  productive  investment,  ultimately  supporting 
growth and innovation. 

(26)  The  reliance  on  fossil  fuels  remains  significant.  Ireland  has  committed  to  achieving 
ambitious  emissions  reduction  targets,  established  carbon  budgets  and  sectoral 
emission  ceilings,  setting  out  clear  reduction  pathways  per  sector.  This  is  to  be 
achieved  notably  through  a  significant  increase  in  the  deployment  of  renewable 
energy. While the renewables share of gross final energy consumption has increased, 
Ireland is not on track to achieve the  national target of a 51% emission reduction  by 
2030 compared to 2018 levels. Fossil fuels still make up the largest share of the energy 
mix, with natural gas accounting for around one third of total energy supply in 2024, 
the  large  majority  of  which  is  imported.  Further  leveraging  the  potential  for 
renewables  in  Ireland  is  thus  necessary.  Implementing  a  streamlined  planning  and 
permitting framework, such as the elements defined in RED III, would help facilitate 
further  deployment.  The  Carbon  Tax  encourages  decarbonisation  throughout  the 
economy, and sets a clear price signal for polluters, but the presence of untargeted and 
permanent  fossil  fuel  subsidies  undermines  these  price  signals.  Additional  policy 
measures to further encourage a reduced dependency on fossil fuels are thus needed. 

(27)  Major  unfulfilled  investment  needs  for  the  electricity  grid  are  a  barrier  to  meeting 
climate  targets.  The  combination  of  higher  domestic  demand  for  electricity  and  the 
integration  of 
increasing  shares  of  variable  renewable  electricity  generation 
exacerbates  the  need  for  improved  energy  infrastructure,  notably  for  transmission, 
distribution and storage. Increasing curtailment rates and grid constraints, as a result of 
limited  availability  of  capacity,  limit  the  flow  of  renewable  electricity,  increasing 
emissions  and  driving  up  electricity  prices.  This  requires  modernised  and  expanded 
grid  infrastructure  as  well  as  increased  efforts  to  improve  the  non-fossil  fuel  based 
flexibility  of  the  electricity  system,  to  efficiently  move  energy  from  generation  to 
demand  centres.  While  significant  funding  has  been  allocated  to  expanding  and 
modernising  the  grid,  delivery  of  investments  remains  to  be  implemented.  The 
installation  of  smart  meters  reached  a  significant  milestone,  with  around  80%  of 
households  now  having  access  to  real  time  consumption  data,  but  there  is  a  need  to 
improve the accessibility of this data and to further encourage consumers to actively 
partake in the flexibility market, including through demand side response measures.  

(28)  Emissions  in  the  building  sector  increased  by  4.9%  in  2024,  driven  in  part  by  an 
energy  intensive  building  stock  and  reliance  on  fossil  fuel-based  space-  and  water 
heating, underscoring the need for decarbonisation of energy demand. While the pace 
of retrofitting has increased year on year, it remains insufficient to achieve the targets 
set forth in the retrofitting strategy. Additional support to retrofitting private dwellings 
could also be further targeted, focusing on tenants, social housing or multi-apartment 
dwellings, or targeting the worst performing buildings. Further efforts to leverage the 
potential  for  district  heating  would  also  allow  for  cost-efficient  decarbonisation  of 
heating.  Public  buildings  account  for  a  significant  share  of  non-residential  energy 
consumption, but efforts have been made to improve their energy efficiency, notably 
the  multiple  public  sector  Pathfinder  projects.  Preliminary  findings 
through 
demonstrate  significant  progress  and  improvements  in  both  energy  efficiency  and 
overall  emissions  reductions.  Continuous  leverage  of  the  experience  gained  in  the 
public sector retrofit pathfinder is thus important to achieve the 2030 targets. 

(29)  Large  energy  users  continue  to  represent  a  significant  share  of  energy  demand. 
Metered  electricity  consumption  by  data  centres  increased  between  2023  and  2024, 

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consuming a fifth of Ireland’s electricity supply. It is estimated that this could increase 
as  the  sector  continues  to  expand.  The  Irish  Commission  for  Regulation  of  Utilities 
issued  a  final  connection  policy  in  December  2025  for  the  connection  of  new  data 
centres to the electricity grid. For this, data centres must provide dispatchable on-site 
or local generation or storage equal to their maximum import capacity. Additionally, 
80%  of  their  annual  demand  must  be  met  by  new,  additional  renewable  energy 
projects  in  Ireland  within  a  6-year  implementation  period.  While  an  important  step, 
there are risks of fossil fuel lock-in that should be addressed. The remaining share of 
annual  demand  could  be  met  by  fossil  generation,  which  would  counteract 
decarbonisation  of  the  energy  system.  Additionally,  the  implementation  period  of  6 
years could  contribute to  a significant  increase in  fossil generation in  the short term, 
putting  at  odds  the 2030 emissions reduction target.  Further ensuring that  the spatial 
planning  of  large  energy  users  is  connected  to  RES  availability  and  grid constraints, 
notably through implementation of the actions identified in the LEAP strategy, would 
contribute  to  circumventing  some  of  the  problems  associated  with  additional 
connection.  

In  Ireland  making  mobility  more  sustainable  requires  further  investment  in  a  more 
integrated public transport network, as this could ease urban congestion and improve 
labour mobility and support sustainable growth. Improving connectivity between rural 
and  urban  areas  would  reduce  car  dependency,  enhance  access  to  services  in  rural 
areas, and make economic development more inclusive while ensuring that all regions 
benefit  from  the  transition  to  a  low-carbon  economy.  Further  zero-emission  rail  is 
essential for accessibility and decarbonisation. With the challenge of decarbonisation 
of road transport, Ireland is encouraged to accelerate the roll-out of electric charging 
infrastructure  for  both  cars  and  trucks.  This  would  also  help  increase  the  uptake  of 
electric  vehicles.  The  density  of  electric  charging  infrastructure  remains  limited, 
including in rural areas. In addition, significant gaps persist for charging infrastructure 
along  the  TEN-T-road  network  as  compared  to  the  2030  targets  sets  forth  in 
Alternative Fuels Infrastructure Regulation. 

Ireland  faces  challenges  in  relation  to  the  transition  towards  a  more  sustainable 
agricultural sector. Greenhouse gas emissions from the sector could further decrease to 
ensure compliance with domestic and EU targets. While the Climate Action Plan has 
laid down a target to reduce emissions by 25% by 2030, provisional data suggests that 
emissions  have  only  decreased  marginally  since  2018,  leaving  scope  for  additional 
policy action. In addition, nutrient run-offs from agriculture, which affect the quality 
of  water  bodies,  could  be  further  addressed.  Around  half  of  surface  waters  were  in 
unsatisfactory ecological status in the last assessment round for 2019-2024, as reported 
by  data  from  the  Irish  Environmental  Protection  Agency.  While  important  measures 
have been taken to address these challenges, the development of further policies and 
practices  could  help  to  simultaneously reduce  greenhouse gas  emissions  and nutrient 
losses.   

(30) 

(31) 

(32)  The  update  of  the  National  Development  Plan  provides  for  significant  levels  of 
investment  in  water  infrastructure.  Ensuring  timely  implementation  and  effective 
delivery to address persistent structural shortcomings is crucial. Wastewater treatment 
continues to face challenges on reliability and environmental performance, as ageing 
infrastructure  and  limited  treatment  capacity  hinder  progress  to  achieve  standards. 
Despite  improvements,  the  leakage  rate  remains  among  the  highest  in  the  EU, 
highlighting the need for more ambitious efforts. Demographic growth, cross-sectoral 
development  needs,  and  climate-related pressures further expose the sector. Ongoing 

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to 

transform  funding  availability 

infrastructure  projects  are  expected  to  contribute  towards  progress,  but  delivery 
improvements. 
remains  key 
Additionally,  the  implementation  of  economic  measures  for  excessive  water  use  has 
not  yet  advanced,  despite  a  clear  legal  framework.  Ensuring  the  implementation  of 
measures  to  limit  excessive  water  use  would  incentivise  more  efficient  use,  and 
support stable and resilient support to water services.   

tangible 

into 

(33)  While  Ireland  has  established  a  circular  economy  policy  framework,  progress  in 
achieving  circularity  has  been  limited  and  largely  confined  to  the  lower  tiers  of  the 
waste hierarchy, emphasising the need for more ambitious and system-wide measures. 
The circular material use rate and the municipal waste recycling rate both stand below 
EU  averages.  Packaging  recycling  is  also  off  track  to  meet  2025  EU  targets.  Waste 
generation is overall increasing, yet treatment remains focused on disposal and energy 
recovery  processes,  such  as  incineration  and  landfilling,  with  a  substantial  share  of 
treatment  taking  place  abroad.  Similar  patterns  are  observed  for  construction  and 
demolition waste, Ireland’s largest waste stream, which has doubled in the last decade. 
The  sectoral  allocation  of  the  National  Development  Plan  earmarks  up  to  EUR 
600 million  for  circularity-related  programmes,  and  a  national  target  has  been 
established to increase the circular material use rate, but solid progress will depend on 
greater  policy  ambition,  scaled-up  investment,  in  particular  for  domestic  recycling 
capacity,  and  cross-sectoral  implementation,  including  a  focus  on  construction  and 
demolition  waste.  The  development  of  new  economic 
the 
strengthening  of  existing  yet  limited  measures  could  help  further  shifting  incentives 
across the waste hierarchy. 

instruments  and 

(34) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States take 
action  to  urgently  address  human  capital  related  structural  challenges  in  the  area  of 
education  and  skills,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed  to  Ireland  can  contribute  to  the  implementation  of  the 
Council Recommendation on human capital in the Union. 

(35)  A  higher  supply  of  social  housing  is  necessary  to  reduce  homelessness  and  protect 
lower  income  segments  that  are  priced  out  of  the  private  rental  market.  The 
construction  of  affordable  and  social  housing  is  scaling  up  but  is  still  far  behind 
current  targets  and  demand,  as  reflected  in  the  approximately  60 000  households  on 
waiting  lists  and  a  further  84 000  households  on  rent  supplement  schemes. 
Considerable investment had gone into social housing. However, supply constraints in 
construction  remain,  while  challenges  related  to  capacity,  resources  and  financial 
planning  of  local  authorities,  as  well  as  the  financing  sustainability  and  stability  of 
approved  housing  bodies, 
further  constrain  social  housing  supply  growth. 
Homelessness doubled over the last five years, reaching a record of 17 500 people in 
emergency  accommodation,  out  of  which  more  than  5 500  children.  Current 
homelessness prevention schemes have yielded  modest results and have been unable 
to stop this increase. 

(36)  Rapid  house-price  growth  over 

the 

last  decade  made  housing 

increasingly 
unaffordable  for  both  buyers  and  renters.  The  lack  of  affordable  housing  affects 
Ireland’s competitiveness as it limits the ability of firms, in particular SMEs, to attract 
skilled  workers,  putting  pressure  on  wages.  Construction  of  new  dwellings  is 
increasing but remains far from matching housing needs. This highlights the need for 
continued action to address capacity constraints in the residential construction sector. 
This  includes  insufficient  access  to  infrastructure  such  as  transport  and  utilities, 

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insufficient  land  availability,  planning  uncertainties,  insufficient  financing  options, 
lack of construction workers and the low productivity in the construction sector. 

(37)  Local  authorities  are  key  actors  in  implementing  the  National  Planning  Framework 
and hold competencies in several sectors, including housing and planning. Constraints 
in  their  resourcing,  administrative  capacity  and  financing  have  led  to  delays  in 
infrastructure  investment  and  policy  implementation,  as  well  as  gaps  in  service 
delivery  that  can  also  impact  housing  projects.  This  highlights  the  need  to  reinforce 
capacities  of  local  authorities,  such  as  through  enabling  longer-term  financial 
planning, in order to boost local capacities to deliver on housing projects territorially. 

(38) 

(39) 

Ireland’s  labour  market  remains  robust  and  shows  low  unemployment  rates,  but  it 
remains a challenge to achieve inclusive growth that benefits all groups. Persons with 
a disability in Ireland continue to experience one of the highest disability employment 
gaps  in  the  EU  and  suffer  significantly  higher  poverty  risks.  Caring  responsibilities 
and  inadequate  access  to  social  services  remain  key  barriers  in  accessing  the  labour 
market for single parents, who also face disproportionately high poverty risks. At the 
same  time,  skills  shortages  and  mismatches  persist  in  key  sectors,  highlighting  the 
need  for  more  outreach  to  and  upskilling  of  the  inactive.  Investing  in  skills  should 
promote  greater  social  inclusion  for  disadvantaged  groups,  including  persons  with  a 
disability, single parents, Roma and Travellers, and help them exit poverty.  

In view of the close interlinkages between the economies of euro-area Member States 
and  their  collective  contribution  to  the  functioning  of  the  economic  and  monetary 
union,  in  2026  the  Council  recommended  that  the  euro-area  Member  States  take 
action, including through their RRPs, to implement the 2026 Recommendation on the 
economic  policy  of  the  euro  area.  For  Ireland,  the  recommendation  (1)  helps 
implement  the  first,  the  second  and  the  third  recommendations  on  the  euro  area, 
recommendation  (2)  helps  implement  the  fourth  recommendation  on  the  euro  area, 
recommendation  (3)  helps implement  the seventh  and the eleventh  recommendations 
on  the  euro  area,  recommendation  (4)  helps  implement  the  seventh  recommendation 
on 
the  fifth 
recommendation on the euro area. 

the  recommendation  (6)  helps 

the  euro  area  and 

implement 

HEREBY RECOMMENDS that Ireland take action in 2026 and 2027 to:  

1. 

2. 

Adhere  to  the  maximum  growth  rates  of  net  expenditure  recommended  by  the 
Council  on  10 March 2026.  Reinforce  defence  spending  and  readiness  while 
ensuring  spending  efficiency  and  gradually  adapting  the  budget  to  sustain 
structurally higher defence spending. Ensure that any measures taken to mitigate the 
impact of the hike in energy prices are temporary, targeted at protecting vulnerable 
households or at addressing the needs of energy-intensive firms, preserve incentives 
for  energy  savings  while  ensuring  that  their  fiscal  cost  is  compatible  with  the 
commitments  under  the  EU  fiscal  framework.  Broaden  the  tax  base  to  reduce  the 
risks  related  to  the  high  concentration  in  Ireland's  tax  revenue.  Continue  efforts  in 
implementing cost effectiveness measures in the health system while accelerating the 
transition towards universal and accessible primary healthcare.  

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes,  building,  where  appropriate,  on  the  reallocation  to  strategic  priorities 
and flexibilities in the mid-term review of the cohesion policy framework. 

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3. 

4. 

5. 

6. 

Ensure  effective  and  sustained  increases  in  public  R&D  investment  and  business 
R&D  investment  support  and  focus  on  sound  and  timely  implementation  of 
measures,  including  direct  funding  instruments,  to  improve  the  productivity  of 
domestic  businesses.  Expand  financing  sources  for  scale  ups  by  facilitating 
institutional  investor  participation  in  venture  capital  and  private  equity.  Enable 
greater direct retail investment by households in capital markets. 

Reduce  overall  reliance  on  fossil  fuels.  Accelerate  the  deployment  of  renewables, 
including 
through  a  streamlined  permitting  framework.  Remove  remaining 
regulatory barriers to non-fossil flexibility. Speed up modernisation and expansion of 
grid  infrastructure.  Strengthen  demand-side  response.  Implement  targeted  measures 
that  support  energy  efficiency  in  private  buildings  and  maintain  efforts  for  public 
buildings.  Further  invest  in  district  heating  solutions  to  leverage  the  potential  for 
decarbonisation  of  heating.  Ensure  that  the  connection  of  large  energy  users  to  the 
electricity  grid  is  linked  to  additional  renewable  capacity  and  system  flexibility. 
Strengthen  investment  in  sustainable  transport  taking  into  account  regional 
disparities, and accelerate the rollout of publicly accessible charging points for zero-
emission vehicles. 

Incentivise further sustainable agricultural policies and practices that reduce nutrient 
losses  and  emissions.  Ensure  the  delivery  of  investments  in  water  infrastructure  to 
improve  wastewater  treatment  and  reduce  leakage,  and  the  implementation  of 
measures  to  address  excessive  water  use.  Increase  investments  in  the  circular 
economy  to  improve  domestic  recycling  capacity,  and  further  develop  economic 
instruments  to  prevent  waste  and  increase  reused,  remanufactured  and  recycled 
content. 

in 

the  residential  construction  sector  by 

Further  increase  the  supply  of  affordable  and  social  housing,  while  preventing  and 
reducing  housing  exclusion  of  vulnerable  groups.  Continue  to  tackle  capacity 
constraints 
to 
infrastructure,  land  management,  planning,  financing  conditions,  labour  supply  and 
construction methods.  Strengthen local  authorities’ capacities to  deliver on housing 
projects. Strengthen the labour market and social inclusion of disadvantaged groups 
by  putting  in  place  better  targeted  outreach  and  upskilling,  and  by  improving  the 
provision of and facilitating access to social services. 

improving  access 

Done at Brussels, 

For the Council 
The President 

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