The new budget has virtually no effect on companies. Of course, there is the usual rhetoric, and the headline-grabbing measure is the one-percentage-point reduction in the corporate income tax rate (IRC) and the 0.3-point cut in the marginal rates of the 2nd to 5th personal income tax brackets (IRS), along with the €40 increase in the Solidarity Supplement for the Elderly. But anyone can see that, compared with what is customary, these are mere crumbs. This year, companies can safely ignore the State Budget without any losses.

What is the impact of the 2026 State Budget on businesses? Before analyzing the issue, it is worth noting how unusual the question is. Why should companies concern themselves with a governmental document like the State Budget? Economics is not politics, and politics is not economics. It is natural for leaders and journalists, who see themselves as the center of the world, to proclaim such measures as decisive. In reality, however, companies have far more pressing matters to attend to and should not waste time trying to decipher something that, by its very nature, merely deals with the financial workings of public institutions.

Unfortunately, in Portugal, owing to the endemic narcissism of those in power (and the chronic dependence of citizenry), public budgets tend to be far more than that. Supremely convinced of the virtue of their inventions, successive governments seem incapable of grasping that the best thing they could do for companies would be simply to leave them alone (and many companies, for their part, enjoy feeding off the State).

Thus, each time a State Budget is released, it usually comes with an attached fiscal reform, a regulatory overhaul, a booklet of perks for influential groups, and countless other effects that go far beyond the document’s proper function. This is what is called budgetary policy, and it forces businesses to pay attention to something that should be of little concern to them, yet ends up seriously disrupting their activity on multiple fronts.

It is precisely in this regard that the 2026 State Budget stands out: for once, such interference is largely absent. The new budget has almost no impact on companies. Yes, the rhetoric remains, and the headlines point to the reduction in the corporate income tax rate, the slight cut in personal income tax brackets, and the increase in the elderly supplement, but everyone knows these are minor gestures. This year, companies can afford to ignore the budget without consequence.

The proposal aims to be as harmless as possible, no doubt due to the institutional fragility of a minority government aware that the budget debate is the most dangerous moment of the political year. It is, in essence, a more modest version of last year’s budget: a smaller surplus, nearly identical growth, and a general adherence to the prevailing current. The clearest proof of this cautious stance is that the word invariant appears most frequently (seven times) in Table 3.2 of the Report (p. 44), entitled “Main budgetary policy measures with impact in 2026.” The budgetary policy for 2026 is invariant.

It must also be said that, despite its prudence, the figures for the coming year can be considered fragile in such an uncertain global environment, given the somewhat optimistic baseline scenario. The document’s projections for nominal growth in 2026 are about 0.35 percentage points higher than those of most other institutions. While not outrageous, this is enough to cast doubt on a budget surplus of just 0.1% of GDP. This fourth consecutive positive balance, a historic feat in this democracy, will likely be the most vulnerable of them all.

In such a discreet budget, perhaps the most significant aspect for companies is what is missing from the 2026 State Budget. Everyone will still recall the euphoria that swept through our economy and electorate a few years ago: the myth of the Recovery and Resilience Plan (PRR), the “last opportunity” for a miracle of Portuguese growth fueled by EU structural funds. Well, 2026 is the final year of that program, and the promised miracle has yet to appear.

One could say that the best thing to do with myths is to forget them. Sensible companies, in any case, should already know better than to believe the follies of governments incapable of realizing that the best help they can offer businesses is to leave them in peace. Yet there is one point that does merit attention: whether well or poorly applied, effective or squandered, the truth is that since 2021, hundreds of millions have been injected into the economy, inflating its performance. The modest growth of recent years has been propped up by these funds. It would be wise for companies to begin preparing for the hangover that will follow once this flow inevitably comes to an end.

João César das Neves, Professor at CATÓLICA-LISBON