Luxembourg

   
 

Executive Summary

Prosperous country,
many foreign residents
Luxembourg is an economically prosperous country in the middle of Europe. It is a member of all important and relevant economic alliances. On 1 January 2019, the country had 614,000 residents, the highest such figure in its history, 47% of whom are foreigners (compared to 43% in 2011 and 29% in 1991).
Brexit boosts passport applications
In recent years, tens of thousands of people have become naturalized Luxembourg citizens. Dual nationality is possible with many countries within the European Union. Following the Brexit vote in the United Kingdom, the number of UK applicants for a Luxembourg passport has increased significantly.
GDP growing faster than euro zone average
Gross domestic product (GDP) in Luxembourg was expected to increase by 3% in real terms in 2019. This indicated that the country was growing significantly faster than the average across the euro zone. Luxembourg’s population increased by 24.4% between 2008 and 2018. By 2028, the Eurostat statistics service expects a further increase of 21.3%. The strong influx of mostly well-educated workers is increasing the long-term demand for goods and services of all kinds.
Investment, private consumption rise
According to the EU Commission, investment in Luxembourg was expected to increase by 3.2% in 2019 in real terms. In addition, private consumption will increase by 3.5% in 2019, according to the European Commission.
 
Luxembourg received 1,900 refugees in 2018. Overall, the country is coping well with immigration. Xenophobia and anti-Semitism are not widespread, and are consistently punished by courts.
Key international
financial center
The country’s economy is booming, profiting in particular from expanding EU and global economies. The relocation of new industries and businesses, increased public investment, and rising domestic demand are all fueling economic growth in Luxembourg. Luxembourg City is one of the EU’s three capitals, and is a key international financial center. The country offers extraordinary business conditions with an attractive tax environment, high levels of private and public investment, strong GDP growth, a high living standard, an outstanding social security system, and low unemployment. The country’s public administration is efficient and the overall economic outlook remains stable.
Welfare system
boosted by growth
Luxembourg has experienced strong economic growth and fiscal stability in recent years. This has provided public authorities with the means to develop and maintain an outstanding welfare system over the last two decades, even as neighboring countries have reduced public welfare provision. Luxembourg’s welfare system includes generous insurance coverage, benefit programs and public services. Nevertheless, there have been some recent problems in the healthcare system due to a lack of medical staff, especially in rural areas.
Ecological policy weaknesses persist
The country still suffers from a number of environmental-protection shortcomings, including the pollution of rivers and fresh water supplies, and nitrate pollution due to agricultural runoff. In addition, many locations still lack connections to wastewater treatment plants. Furthermore, the condition of the country’s forests has deteriorated in recent decades.
Green Party gaining
in strength
In the 2018 national elections, the Green Party was able to increase its vote share significantly, and consequently the number of government ministries it held. However, the party was thrown into crisis the following year due to a data-protection scandal and the loss of important officeholders.
Citations:
“Luxembourg.” OECD Better Life Index, www.oecdbetterlifeindex.org/countries/luxembourg/. Accessed 19 Oct. 2019.

“Luxembourg.” OECD, www.oecd.org/luxembourg/. Accessed 19 Oct. 2019.

National plan for smart, sustainable and inclusive growth – Luxembourg 2020. Le gouvernement du Grand-Duché de Luxembourg, 2017. www.gouvernement.lu/6854313/2017-pnr-luxembourg-fr. Accessed 19 Oct. 2019.

Tageblatt, 2 Apr. 2019: “Luxemburg wächst weiter,” www.tageblatt.lu/headlines/luxemburg-waechst-weiter-614-000-einwohner-am-1-januar-2019/. Accessed 1 Feb. 2020.

Zenthöfer, Jochen: “Standort Luxemburg. Vom Wachstum eines Kleinstaates,” in: Frankfurter Allgemeine Zeitung, 22 January 2018, p. 16.

“Luxemburg: Bruttoinlandsprodukt (BIP) pro Kopf in jeweiligen Preisen von 1980 bis 2018 und Prognosen bis 2024.” Statista, www. statista.com/statistik/daten/studie/14441/umfrage/bruttoinlandsprodukt-bip-pro-kopf-in-luxemburg/. Accessed 21 Nov. 2019.
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