The Malta Chamber of Commerce has issued its bluntest pre-budget warning in years, telling government that Budget 2027 must mark a decisive break from Malta’s volume-driven growth model and become the launch-pad for structural reform.
In its 80-page Pre-Budget Document titled RESET and LEAD, the Chamber says an honest assessment shows that too many past recommendations have been “left unaddressed, delayed or stalled” and that incremental adjustments are no longer enough.
In his address, chamber president William Spiteri Bailey said that none of the issues raised were being aired for the first time, noting that the Chamber had repeatedly flagged them across successive budgets and governments. Acknowledging Malta’s shortcomings, he said, was not talking the country down but a necessary precondition for fixing what was not working.
He described the document’s call for reform as a national rather than partisan position, saying it belonged to neither the Labour nor the Nationalist parties but to Malta as a whole, and urged Government to move from complacency to accountability and from announcement to execution.
Chamber CEO Marthese Portelli was equally direct, calling it an uncomfortable reality that too many critical proposals had been unaddressed or stalled. The time for incremental adjustments, she said, had passed- Malta now needed reforms that initiate real structural change.
The core diagnosis is stark: Malta’s economic expansion is running out of steam, the chamber noted. Between 2015 and 2025, Gross Value Added rose by 81.9%, but 68.9% of that growth came from simply adding more workers, 9.9% from sectoral shifts, and only 3.1% from actual productivity gains.
With participation already at 82.6% – well above the EU average of 75.7% – and 9,544 vacancies chasing just 1,236 registered unemployed at end-2025, the Chamber argues the labour tap cannot be turned further.
The Malta Fiscal Advisory Council calculation cited in the report illustrates the cost: to keep 4% GDP growth with productivity at historical levels, Malta would need 14,000 additional workers per year. With 3% productivity growth, that falls to 6,000. The mismatch is already hurting business, the chamber said.
Compensation per employee is set to rise 4.4% in 2026 while labour productivity grows just 0.1%, versus 1.0% EU average. For a second year, pay is outpacing output. R&D spending is 0.54% of GDP against 2.24% in the EU, STEM graduates are only 13.8% of post-secondary output, and 43% of firms lack green skills.
The fiscal picture, while headline-positive – deficit down to 2.2% of GDP in 2025 and debt at 46.4% – is also fragile, the Chamber warns. The improvement is driven by a record surge in income tax paid by firms registered in Malta but operating mostly overseas, which benefit from the refund system but still pay significant net tax. Meanwhile the debt-to-GDP ratio is being flattered by growth; the nominal debt stock continues to rise, and EU cohesion funding is set to shrink from 60% to 40% co-financing as Malta’s income converges.
“Malta cannot keep growing by adding people, vehicles and pressure on public infrastructure faster than it adds value,” the document states.
Budget 2027 must shift to “a country that grows through excellence, standards and innovation, not through volume alone.”
To do that, the Chamber splits its proposals into two timelines.
Section A: What must happen in Budget 2027 is established by the Chamber as needing an immediate, 12-month execution.
Funding, Investment and Taxation: A multi-year Transformation Fund for digitalisation, cyber resilience and skills; upfront cash payments of a percentage of approved grants to solve liquidity delays; publication of binding payout timelines; and safeguards to stop public entities crowding out private firms from EU funds.
On taxation, the chamber notes a two-speed system: foreign-controlled firms outperform local firms on productivity partly because the 6/7ths refund allows reinvestment, while domestic firms pay 35%, the highest in Europe. It proposes 100% venture capital tax credits for Malta-based investors in Maltese startups, and Retail Savings and Investment Accounts to channel private savings into local enterprise.
It also calls for the full €100m digitalisation allocation from 2026 to be carried over to 2027 and launched on January 1, not mid-year, with industry-specific NACE-based schemes.
Human Resources and Skills: The chamber made an early warning that the skills gap could create systemic unemployment. PISA results are cited: 453 in science (OECD 482), 439 in maths (OECD 463), 415 in reading (OECD 461), with reading down 31 points since 2022. 29.4% of 15-year-olds lack baseline proficiency in all three subjects; only 8.3% reach top tiers.
Technology: Malta is behind EU Digital Decade 2030 targets: 83.5% of SMEs have basic digital intensity (target 90%), 65.1% use cloud (target 75%), but only 21.5% adopt AI (target 75%) and 38.9% use data analytics (target 75%). Proposals include a national digital and AI readiness framework 2027-2031, a National AI Lab as a public-private partnership, mandatory fibre-ready and 5G small-cell provisions in new builds, a one-stop helpdesk for NIS2, AI Act and DSA compliance, and raising CYBER+ALT ceilings from €60k to €100k and Mind the Gap from €10k to €50k.
Infrastructure: On planning, the chamber proposes limiting planning circulars to technical clarifications only and introducing a strict no-benefit-from-illegality rule to end the “build first, sanction later” idea. There should be fiscal incentives for heritage restoration and adaptive reuse.
On mobility, there should be a fiscally neutral e-wallet funded by parking/congestion revenues to drive modal shift, prioritising public transport quality and capacity over more subsidies.
Longer-term ideas include smart parking systems, logistics consolidation hubs, and a dedicated budget line for the 45,000 sqm Hal Far International Logistics Hub.
On energy, the chamber is calling for the acceleration of grid modernisation, cable replacement, BESS integration, solar-as-a-service models including Corporate PPAs and ESCO models, renewable energy zones, and simplifying support for EV fleet and depot electrification including bidirectional V2G frameworks.
On water and waste, there is a need for upgrading sewage, storm water separation, and a phased pay-as-you-throw system plus mandatory construction waste classification, the chamber said.
The tourism industry should shift from volume to value-enhancement, moving away from low-margin, labour-heavy models that add congestion.
The Chamber called for automated AI-enabled monitoring to flag violations consistently, tackling market distortions caused by state inaction, enforcing FIAU AML rules proportionately, capping merger fees, implementing a “One-Time-Only” principle across government via a coordinated platform and the Malta Business Wallet, and a competitive aircraft leasing framework matching Irish standards to build an aviation finance hub.
To protect competitiveness, the Chamber wants bold State Aid notifications beyond block exemptions, citing recent approvals from €1bn in Slovakia to €23bn in Italy. It seeks an Emergency Funding Mechanism for CBAM verification costs, temporary support for ETS, FAF and BAF shipping cost increases in 2025-2027, and full transparency on ETS funds collected.
Section B: Reforms to complete by end of legislature
Here the tone shifts to governance and long-term transformation, which must be launched in 2027, the chamber said.
Planning & Construction: overhaul policies to prioritise quality and liveability.
Mobility: publish a plan with milestones beyond 2027, deploy TMROADS to all entities and the public; relocate on-road parking underground.
Energy: prepare for post-2035 liberalisation even if a derogation beyond 2027 is secured.
Waste: circular economy rules for construction and demolition waste with secondary markets.
Digital Transformation, Education, and Procurement get dedicated chapters. Education reform must be completed by end-2029 with a new National Curriculum mandating STEAM, digital and financial literacy from primary level.
Public procurement must be rebuilt around quality, not price-only: a fully resourced central authority, six-month rolling procurement outlook, a public Contract Register tracking milestones and variations, automatic price indexation, and supplier whitelisting/blacklisting.
On pensions, the Chamber proposes positive actuarial incentives to defer retirement while keeping the 42-year contribution requirement, and childcare credits to keep parents in work.
On governance – the final and most political section – the Chamber calls for full implementation of the European Commission Rule of Law Report 2026: a Register of Lobbyists and Transparency Register, independence of the national broadcaster, media safeguards, prohibition of government-linked second jobs for MPs, GRECO integrity frameworks, and political party finance reform.
It goes further, proposing an Independent Commission under the President by end-2027 to lead Electoral Reform: reducing districts from 13 to 5, cutting Parliament to 45 full-time MPs with competitive executive-level salaries, banning second jobs, providing research staff, and introducing a 5% national threshold for third parties instead of 16.7% in one district. It also wants a statutory cap on positions of trust with public disclosure of all compensation.
