site.btaAutomotive Cluster Warns 2026 Budget May Slow Investment

Automotive Cluster Bulgaria (ACB) said on Wednesday that key parameters in the 2026 draft budget could slow investment in the country’s automotive sector. The association warned that rising labour and social security costs, a higher dividend tax, and new transport regulations could slow down industrial growth and even force factory and R&D centre closures, while the draft budget again offers no real incentives for innovation.

ACB said the measures run counter to the EU’s Clean Industrial Deal, which urges Member States to ease regulatory and cost burdens and support key sectors, including automotive manufacturing.

The cluster warned that doubling the dividend tax to 10% would bring little fiscal benefit but could deter investment and encourage profit shifting through shell companies or hidden distributions through sham services and non-market prices.

ACB warned that late-year fiscal and regulatory changes undermine investor confidence and risk driving industrial investment to more predictable markets. The organization noted that faster public-sector wage growth, a budget deficit and higher taxes are fuelling inflation and worsening the business climate.

Automotive Cluster Bulgaria urged starting talks with businesses by spring 2026 to create a stable, predictable and investment-friendly policy framework by year’s end.

The automotive industry currently provides direct employment for about 1% of Bulgaria’s workforce, with an indirect economic impact several times greater. Over the past 15 years, the sector’s steady expansion has contributed to the economic transformation of regions such as Plovdiv and Vratsa. In recent years, the automotive industry has accounted for between 10% and 11% of Bulgaria’s GDP, the statement said.