While discussions regarding the Luxembourgish financial centre may not always take centre stage, its significance to the country’s economy is undeniable. Employing 64,000 people, with one-third of all jobs in the Duchy indirectly connected to it, its impact is felt in our daily lives. Notably, the finance sector generates every 4 euros in the country, while substantial tax revenues totalling 4.7 billion euros have been generated from the sector thus far.
Luxembourg’s growth hinges on attracting more businesses and talent from abroad. To achieve this, the country must stay on this path of advancement. Moreover, there’s potential for Luxembourg to establish itself as a hub of excellence in data, supercomputing, cybersecurity, and artificial intelligence (AI). Given the transformative potential of AI, the country should seize the opportunity, emphasised Adehm, the budget rapporteur. The CSV MP also highlighted the issue of over-indebtedness among Luxembourg residents, which is quite significant. The primary reason behind this is the high prices of real estate. A staggering 81% of residents have mortgages, and an additional 35% have taken out personal loans, mostly for purchasing cars. Over-indebtedness has been somewhat of a taboo topic in public discourse, and there is a lack of comprehensive statistics available on the matter. Financial education should be compulsory in school. In Belgium, there exists a central credit system where every resident is required to report and register their loans. This system has been proposed as a potential idea for Luxembourg by the CSV MPs in their budget report analysis. However, it’s crucial to emphasise that any such system should not compromise banking secrecy, which is a fundamental aspect of Luxembourg’s financial sector.
The 2024 draft budget is a transitional budget for the remaining eight months of the year. However, the government has already emphasised selected aspects, such as the 1.9 billion deficit for the central state budget. The full state budget - which includes municipal budgets and social security - has a deficit of 987 million euros. The solidarity package and energy price cap, designed to help households weather recent crises, make up a large percentage of the government’s expenses. Despite this, investments remain high, and are expected to make up 4.4% of Luxembourg’s GDP next year.
