Budget 2027: €400 million energy support commitment shapes business outlook

Malta’s forthcoming Budget will put the cost of protecting households and businesses from higher energy prices firmly in focus, with subsidies expected to remain at approximately €400 million in 2027. Finance Minister Clyde Caruana is scheduled to present the Budget on 26 October.

Speaking at a Times of Malta networking breakfast on 6 October, Caruana said the government was prepared to respond to further international disruption. According to TVM News, he indicated that VAT and social security contributions would remain unchanged.

The scale of energy spending illustrates the choices facing policymakers. PwC Malta’s summary of the minister’s pre-budget conference puts projected energy expenditure for 2027 at around €500 million, comprising approximately €400 million in subsidies and €100 million in infrastructure investment.

For businesses preparing next year’s budgets, continued support would provide greater visibility over an important operating expense. It could also help contain pressure to pass additional costs to customers, although individual companies’ margins will depend on their wider wage, supply and financing costs.

Prime Minister Robert Abela subsequently reinforced the commitment to stable electricity, water, gas, petrol and diesel prices during an interview on 11 October. He also said parents would receive a further income tax reduction from 1 January, while VAT and social security contributions would remain untouched.

Employers are also awaiting confirmation of the statutory cost-of-living adjustment. At the earlier breakfast, Caruana indicated an increase of approximately €5 a week. That figure remains an indication ahead of the Budget, rather than a confirmed adjustment on which to finalise payroll forecasts.

The timing of the promised €1,000 superbonus also remained unresolved at that event. Caruana reaffirmed the commitment but did not give an implementation date. He explained that its design sought to reach taxpayers who would gain little or nothing from changes to income tax bands.

These commitments sit alongside a projected fiscal deficit of 2.8% of GDP for 2026, according to PwC’s account of the pre-budget conference. Although below the EU’s 3% reference threshold, the continuing subsidy bill represents a substantial demand on public finances.

From a business planning perspective, the forthcoming Budget’s detail will matter as much as its headline commitments. Implementation dates, eligibility rules and confirmed payroll adjustments will determine how the measures translate into operating costs, household spending power and investment decisions for 2027.