In the field of the economy, finance and employment, the Grand Duchy is in a position well above the average for the countries of the European Union. Growth in employment remains firm compared with the European average, with an unemployment rate of 6.1%. Public finance is also on the whole healthy.
In its "winter package", the European Commission has taken a close look at the economic and social situations of the EU's member States. Apart from Germany, the Grand Duchy is the only country in the euro area that still has a triple-A rating from the three major financial rating agencies. And quite rightly so. According to the report, economic activity in the Grand Duchy has speeded up considerably in recent years, returning to growth rates close to pre-crisis levels, with production increasing by an average of 4.6% between 2000 and 2007. According to the Commission's forecasts, economic activity is set to continue its growth, at a rate of about 4%.
Finance - a flagship
Growth is likely to be carried above all by the financial sector, which remains the main driving force in the national economy. The investment fund sector in particular has boomed. The fund sector remains the largest in Europe in terms of value of investment fund assets, and the second largest in the world, after the USA.
Public debt dropped from 23.4% of GDP in 2013 to 23% in 2014. It is still four times lower than the average for the euro area (94.5% of GDP). Although the Grand Duchy's debt is lower than other countries', private-sector debt is much higher than the average for the euro area. It peaked at 408.9% of GDP in 2007 before falling to 342.2% of GDP in 2014.
Despite these good figures, the report reveals that there is a risk of increasing expenditure connected with the pensions system posing a threat for public finance. Moreover, progress still needs to be made in terms of property prices.
(article written by the editorial team of the portal luxembourg.lu)