Issue link: https://maltatoday.uberflip.com/i/1540773
10 maltatoday | TUESDAY • 28 OCTOBER 2025 OPINION BUDGET 2026 arrives at a defining mo- ment for Malta's economy. Growth re- mains robust, employment is high, and public confidence steady. Yet behind this reassuring picture lies a sense that the country is coasting rather than steering; sustaining momentum, but not yet setting a new direction. The budget is careful, compassion- ate, and calibrated to protect house- holds and businesses in uncertain global times. It provides comfort where it is needed most. But it also reveals a famil- iar tension between short-term relief and long-term renewal. Malta has built a model that prizes sta- bility. This year's budget stays true to that tradition. Energy prices remain fro- zen, families receive meaningful tax re- lief, pensions and benefits are raised, and businesses continue to access targeted support. These measures are politically and socially sound. They maintain co- hesion at a time when inflation, housing pressures, and global uncertainty could easily unsettle it. Yet stability alone can- not substitute for strategy. Malta's fiscal resilience depends not only on revenue, but on reform. The fiscal framework projects growth and a narrowing deficit, both plausible but dependent on continued buoyan- cy and subsidy control. The choice to maintain universal energy support has undoubtedly protected households, but it has also absorbed resources that could have been channelled into energy transition and productivity-enhancing investment. The challenge is no longer whether Malta can afford subsidies, but whether it can afford to remain depend- ent on them. Socially, this budget stands out for its ambition. The family tax reform is one of the most significant in recent years; generous, progressive, and long over- due. It recognises that families are under strain, that affordability and fertility are now economic issues, and that working parents need tangible relief. It offers both financial space and a signal of fair- ness. Yet the real test will be impact. Tax cuts alone will not reverse demograph- ic trends or boost labour participation without complementary measures in childcare, housing, and flexible work. Malta has taken an important step for- ward; it must now build the ecosystem that makes family life sustainable in practice, not just in policy. The same balance applies to the busi- ness measures. Expanding MicroInvest, introducing new investment credits, and strengthening R&D incentives are all positive moves. They support the back- bone of the economy and help smaller firms upgrade technology and skills. But the path to long-term competitiveness requires more than continuity, it re- quires transformation. Productivity has plateaued, private investment in inno- vation remains among the lowest in Eu- rope, and the economy's structure is still weighted toward construction, services, and labour expansion. The opportunity now lies in using these fiscal tools to ac- celerate a shift toward higher-value sec- tors, from digital manufacturing to life sciences and sustainable mobility. The direction is right; the pace must quick- en. Education and skills sit at the heart of that transformation, yet remain the country's quietest reform frontier. The Budget acknowledges the importance of digital and green skills, but educa- tion policy still lacks the coherence to match economic ambition. Malta's fu- ture growth will not depend on how many people it employs, but on how ca- pable they are. The goal must be a life- long learning culture that moves beyond credentials to creativity; producing not only workers, but thinkers, technicians, and innovators who can adapt in a fast-changing world. Energy and climate policy reflect Mal- ta's central dilemma: the desire for sta- bility clashing with the necessity of tran- sition. Keeping energy prices stable has maintained social calm, but it has also delayed decarbonisation. With subsi- dies still absorbing a significant share of expenditure, the country must begin a gradual but firm shift toward target- ed support, renewables, and efficiency. The Budget's references to new solar and offshore wind projects are welcome, but Malta's credibility will depend on execution. The energy transition should be viewed not as a cost, but as an in- vestment in competitiveness; the foun- dation of a self-sufficient, future-ready economy. Housing remains the most visible so- cial pressure point. Rent support and first-time buyer incentives continue to provide short-term relief, yet Malta's housing model remains driven by de- mand-side support rather than structur- al reform. With land scarcity and specu- lative pressures mounting, affordability cannot be achieved through subsidies alone. Regeneration, planning reform, and sustainable urban development must become central to housing policy. A forward-looking approach would treat housing as both an economic and social asset; one that strengthens communi- ties, enhances liveability, and supports families rather than burdening them. Healthcare funding remains solid, un- derscoring Malta's commitment to eq- uity and universal access. New clinics, hospitals, and community care facilities will expand capacity, yet the next phase of progress must focus on prevention and efficiency. Ageing and chronic dis- ease will increasingly define the fiscal landscape. Investing in digital health, da- ta integration, and behavioural preven- tion can reduce long-term costs while improving outcomes. Health should no longer be seen merely as expenditure, A compassionate budget that reassures more than it reinvents Rent support and first- time buyer incentives continue to provide short- term relief, yet Malta's housing model remains driven by demand-side support rather than structural reform