RTL Today – Luxembourg: While the economy is not bad, inflation and debt are problematic
This year, the economic situation in Luxembourg would not have been as bad as one might have expected. This good situation was only possible with the support of the State, underlined Thursday the Chamber of Commerce during a press conference.
High inflation and its consequences are and remain a problem for the economy. Other factors could also jeopardize economic stability and growth in Luxembourg.
The Chamber of Commerce considers the loss of productivity and the aggravation of the public debt to be problematic. While the latter was 14 billion euros in 2019, it should reach 27 billion by 2026. The state budget also indicated that public finances will continue to deteriorate. The surplus of 900 million euros from the central administration on September 30 should be put into perspective, according to the director general of the Chamber of Commerce, Carlo Thelen. “It’s because the scales have not been indexed and thanks to VAT receipts, because prices have increased, this automatically leads to more VAT receipts. And Social Security is ‘losing ground’, with 2.4 contributors for a retirement in 2012 and only 2 contributors 10 years later.”
The impact of inflation on the economy was also discussed. The situation would be uncertain, but the Chamber of Commerce hopes that the inflation will only be temporary. If this were not to be the case, we could count on inflation at 8% in 2024. Companies would already be feeling the repercussions through soaring energy prices. The industry and construction sectors would be particularly impacted.
Faced with the challenges looming for the economy, the Chamber of Commerce makes several proposals. It would be, among other things, important to get out of the debt spiral, according to Carlo Thelen. “I think we have to proceed in a much more selective way, we make a lot of things free in Luxembourg, we have to reconsider where the priorities are. There is a lot of talk about pension reform, on this point we have no illusions that it will be suppressed in an election year, but it will have to be suppressed afterwards, because our reserves are melting very quickly.”
Some investments should also be reconsidered. Occasional and selective aid to companies would be desirable. Despite everything, we will have to let them work and not present them with new regulations.