Recently, speaking in the European Parliament, I raised a concern that is increasingly difficult to ignore. Across Europe, people are spending more at the supermarket and bringing home less. Young people with decent jobs are struggling to afford a home. For those on fixed or modest incomes, every increase in the cost of essentials carries greater weight.
This is why I have argued for stronger action against anti-competitive behaviour and abusive practices that unfairly push up prices. European economic policy must ultimately improve the lives people lead. The same test should apply when we examine Malta's Budget for 2027.
Our economy continues to grow. That is important, but it cannot be the end of the discussion. We must ask what that growth means for the parent raising children, the pensioner managing a fixed income and the small business deciding whether it can invest in its future.
Two measures in Monday's Budget deserve particular attention.
The first is the next stage of income tax relief for parents. In 2027, a married couple with two or more children will pay no income tax on the first €30,000 of taxable income. This puts more money in family budgets, where the costs of food, education and everyday life are felt directly.
It also speaks to the longer-term concern that is demography. Supporting families is not simply a question of financial assistance today. In a country facing a low birth rate and an ageing population, we need to make family life more affordable and give younger generations greater confidence in their future. Tax relief helps, although affordable housing and services that allow parents to balance work and care remain a people's priority.
The second measure looks at the productive side of our economy. Companies with turnover not exceeding €1 million will be eligible for a reduction in the tax rate from 35% to 25% on profits they retain or reinvest, subject to the applicable rules. That distinction matters as this specific measure is tailored to encourage the enterprise to upgrade its equipment, train employees or adopt better technology instead of rewarding the distribution of profits.
For years, growth has depended heavily on increasing the numbers of workers and visitors. We now need to generate more value from the work we do. Higher productivity should mean better wages and opportunities, without placing ever greater pressure on our infrastructure and communities.
There is a strong social dimension. The €10 weekly increase in pensions, including the cost-of-living adjustment, offers further support to older people. Meanwhile, the decision to allocate around €400 million to maintain energy subsidies protects households and businesses from sharp fluctuations in international prices. Keeping essential bills predictable is itself a significant social intervention.
The Budget also addresses the broader challenge of managing growth sustainably. Higher tourist contributions can help meet the demands placed on infrastructure and public services. The wider aim must be to ensure that economic growth supports the services we all rely on, with careful attention to how measures affect workers, businesses and families. Sound public finances, a competitive economy and social cohesion must advance together.
No single budget can resolve every structural challenge. But it can set a clear direction: supporting households, encouraging investment that raises productivity, and strengthening public services. As measures take effect, continued dialogue and attention to their practical impact will help ensure they deliver lasting benefits.
The true measure of economic success lies in people's everyday lives: parents able to provide for their children with greater peace of mind, pensioners living with dignity, and young people confident that they can build a future in Malta. This is the progress we should work towards, and the purpose our economic policies must always serve.
Thomas Bajada is a Labour MEP