In this article we are talking briefly about the economy. To start, Luxembourg is one of the wealthiest countries in the world. Moreover, it has one of the eurozone’s highest current account surpluses as a share of GDP, maintains a healthy budgetary position, and has the region’s lowest level of public debt. In addition, Government spendings on public investments reach around 4% of its GDP since 2015 (Source). This corresponds to 3 000 € per resident, annually. The public investments keep the country in shape for the future. So, the country has proper infrastructures such as good streets, high-speed Internet or new and innovative Schools.
Luxembourg’s main characteristics are discreetness as well as the political and social stability. The stability is based on a culture of consensus, tolerance and acceptance. As a result Luxemburg is a perfect place to work and do business and its high quality of living makes it a pleasant place to live.
As one of the few countries in the world, Luxembourg holds only top ratings from Standard & Poor’s, Moodys and Fitch. The “AAA” rating is an important sign of confidence for the Luxembourg economy.
As a result Luxembourg’s economy is the Power House of the Greater Region and is attracting everyday 200 000 cross-border workers from France, Germany and Belgium. GDP’s growth was 3,4% in 2017 while the job market has grown by 3,7%! Unemployment is down to 5,3%, which is one of the lowest rates in Europe. More informations about jobs and the population will follow in one of the next articles.
Luxembourg Finance Industry
What plays in favor for the finance industry are favorable taxation and regulatory frameworks. Luxembourg has over 83 double tax treaties with its international partners (and 15 under negotiation). According to the World Bank, Luxembourg also offers one of the 4 lowest total tax rates in Western Europe.
When it comes to the Luxembourg Finance Industry, it is worth mentioning that it is the largest global distribution centre for investment funds, with its funds offered in more than 70 countries around the world. With an astonishing sum of EUR 4,000 billion in net assets under management, Luxembourg is the largest investment fund centre in Europe and the second largest in the world after the US. Located in the heart of Europe, it leads the way in investor protection and has a highly experienced and responsive regulator. Luxembourg is a door opener for business investments in Europe. Moreover, Luxembourg is also one of the World’s key players in green funds.
Did you know that since 2007, Luxembourg offers a specific investor visa program for non-EU citizens? This program makes it possible for wealthy non-EU citizens to obtain residency in Luxembourg under certain conditions.
Besides the Fund Industry, the Banking Industry is a very important pillar of the economy. The financial center has established its reputation as a recognized international banking place since the 1960’s. Due to the country’s ability to rapidly comply with new regulation, Luxembourg remains until today at the top among all financial centers across the world.
How did Luxembourg build these strong positions in the global investment industry? It comes down to three concepts: international orientation, excellence and stability (Marc Saluzzi – Chairman ALFI). But in order to remain successful, the Grand-Duchy has to attract highly qualified people from all over the world.
Don’t believe that Luxembourg is all about finances. Luxembourg also hosts important global players from other business sectors such as RTL, SES, Goodyear, Arcelor-Mittal, DuPont de Nemours, Cargolux, etc. In comparison to its total population of only 600,000 people, the Luxembourgish economy is very broad. So the country is making a strong focus on attracting highly qualified Engineers, IT-experts, Mathematicians, Doctors, Researchers, etc.
The new economy : Rifkin process – Space resources – Fintechs – Data Centers
Luxembourg offers the latest technology in communication. 25% of all European Tier IV certified data centers (highest reliability level of data centers) are located in Luxembourg, ranking it in first position in terms of Tier IV density in Europe. The country is also ranked 1st for Technological Readiness worldwide by the World Economic Forum.
Luxembourg understands, that it has to diversify its economy. Diversification trough innovation. The country transforms to a highly successful Start-Up nation, especially in the Fintech sector. Furthermore, the Government is pushing the Rifkin (third industrial revolution) process as well as the very ambitious initiative Space Resources (Space Mining). All of those initiatives are placing Luxembourg on the world map.
We hope that you enjoyed reading this article.
Your MSK Group Team!