Luxembourg's public finances are under pressure, with slower revenue growth and rising expenditures widening the deficit – though the Minister of Finance Gilles Roth remains confident it will stay below the €1.29 billion target set in the 2025 budget.

After six months, the government – excluding municipalities and social security funds – is running a deficit of around €111 million. Revenues have lost momentum, increasing just 2.5% in the first half of the year. This slowdown is partly due to inflation-linked tax bracket adjustments and housing investment support measures that ran until June.

Expenditures, meanwhile, rose 6.9% compared to the same period last year, driven largely by higher salaries and pensions in the public sector. Finance Minister Gilles Roth avoided going into much detail, but reiterated he intends to proceed with "caution" – though he sees no reason to revise the government's course for now. In fact, he expressed confidence that the central government will end the year with a deficit lower than the €1.29 billion forecast in the 2025 budget law.

© RTL
© RTL
© RTL
© RTL
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LSAP warns of 'gamble'

LSAP MP Franz Fayot voiced concern over what he called the government's "gamble" on the future, relying too heavily on the financial centre. He argued that some corrections are necessary, warning that it is unsustainable to keep raising security spending while continuing to cut taxes.

Fayot noted that all parties had long agreed on maintaining high levels of public investment, but said structural tax cuts threaten this consensus. He pointed out that the LSAP has consistently opposed such cuts over the past two decades for this very reason.