Key facts
- Baker Tilly International CEO Brendan Murphy warns upcoming budget will likely carry 'pain cost' for businesses.
- Murphy believes Budget 2026 will prioritize capital spending with limited funds for tax changes.
- He argues for more support for domestic businesses and entrepreneurs to foster indigenous economic growth.
- Murphy notes that for multinationals, ease of expansion is a key factor alongside tax considerations.
- The UK Budget introduced new challenges for HR teams, including frozen tax bands and changes to salary sacrifice schemes.
- Rising employment costs and economic flatness have contributed to increased redundancies in the UK.
Brendan Murphy, chief executive of Baker Tilly International, has cautioned that the upcoming budget is likely to impose significant costs on businesses due to anticipated tax changes. He expressed concern that while capital investment is necessary for infrastructure, the budget may not sufficiently support domestic businesses and entrepreneurs, potentially hindering the growth of the indigenous economy.
Murphy noted that Budget 2026 is expected to prioritize capital spending, with approximately €1.5 billion allocated for tax packages, a modest amount compared to previous years. He acknowledged the importance of infrastructure investment for retaining and expanding companies, especially in the context of global trade wars and tariffs where reliable energy, data centre capacity, and water supplies are crucial for future expansion.
However, Murphy believes the government should increase its support for domestic businesses, entrepreneurs, and investors to foster indigenous economic growth and reduce reliance on multinational corporate tax revenue. He contrasted this with the focus on attracting and retaining foreign direct investment (FDI), stating that while this is important, more encouragement for entrepreneurship is also needed.
For multinational clients, Murphy observed that the conversation has shifted away from headline tax rates, as global regulations like the OECD's minimum corporation tax limit independent reform. The focus is now on how to retain and encourage further investment by ensuring ease of expansion and operational stability. He stressed that the primary risk for these firms is not relocation but a slowdown in future investment due to factors like tariffs and operational ease.
Murphy also highlighted challenges for HR teams in the UK following a recent budget, including the impact of frozen tax bands and thresholds leading to higher tax burdens through fiscal drag. Changes to salary sacrifice schemes and increasing minimum wage pressures are creating administrative and strategic complexities for employers. Rising employment costs and economic flatness have already led to increased redundancies, and further cost increases may prompt workforce restructuring or greater investment in automation.