In his New Year’s address on Tuesday, the director general of the Chamber of Commerce warned that Luxembourg’s current economic growth is insufficient to sustain its social model in the long term, despite the country’s favourable starting position.
Director General Carlo Thelen said the Grand Duchy is at a crucial economic crossroads. “Our growth is a long way from the 3 to 4 per cent we would need,” he told the organisation’s annual reception – describing growth not as an ideological goal but as a necessity.
He cited a challenging international environment – marked by high energy prices and increasing regulation – alongside domestic hurdles. High production costs, stagnant productivity, and a heavy administrative burden are holding businesses back. “It’s not just the external situation; we ourselves are making it too difficult for our companies,” he stressed.
A particularly alarming factor, Thelen said, is the ageing population and its implications for funding pensions, healthcare and long-term care. He warned that many people were not yet fully aware of the scale of the challenge. At the same time, he continued, Luxembourg must balance new strategic spending with the need to maintain its AAA credit rating.
Despite a sobering outlook, Thelen noted reasons for optimism, citing Luxembourg’s strong foundational position. However, he stressed that 2026 will be a decisive year: “Anything not initiated this year is unlikely to be implemented before the next election.” He called for urgent reforms in competitiveness, wage costs, housing, health, and digitalisation.
Following a 2025 he characterised as dominated by political and social debates, Thelen insisted that 2026 must return the economy to centre stage. “This cannot be achieved without growth and without competitiveness,” he concluded.
