Luxembourg has achieved high levels of growth and well-being but must do more to preserve and share prosperity

Luxembourg 19

(Polina Sushko, Unsplash)

This article is brought to you in association with OECD.


Luxembourg’s economy has grown at a robust pace and has enviable levels of well-being, but public policy can do more to make growth sustainable and inclusive, according to a new report from the OECD.

The latest OECD Economic Survey of Luxembourg discusses the challenges of making housing more affordable and reviving productivity growth. The Survey projects economic expansion will continue, with growth of about 2% this year and 2.5% next, but cautions about the risks of a possible downturn.

The Survey, presented in Luxembourg City by OECD Secretary-General Angel Gurria, Luxembourg’s Finance Minister Pierre Gramegna and Housing Minister Sam Tanson, discusses the need to address financial sector risks, ageing-related pressures and use tax reform to support sustainable growth.
“Luxembourg is in an enviable position, with growth that outpaces its neighbours and high levels of well-being for its citizens,” Mr Gurria said. “The challenge facing policymakers today is to ensure that Luxembourg remains prosperous and that this prosperity is widely shared, through reforms that enhance economic resilience, inclusiveness and sustainability.” (Read the full speech.)
Reducing financial risks should be a priority, the Survey said. With rising household indebtedness creating vulnerabilities for families and banks alike, the Survey recommends Luxembourg introduce borrower-based macroprudential instruments, such as caps on loan-to-value or debt-service-to-income ratios, as foreseen in draft legislation.
It also underlines the need to further enhance financial sector resilience and foster the transition to a low-carbon economy. The disclosure of climate-related risks by financial intermediaries, in line with the recommendations by the Task Force on Climate-related Financial Disclosures, should be pursued. Further reinforcement of financial supervision, namely by continuing to monitor credit risks on intra-group bank exposures and to enhance on-site inspections and data collection on investment funds, is also necessary.
The Survey points out the need to make the housing market more efficient and more equitable. Tax policy can be used to boost housing supply, notably by reforming recurrent taxes on immovable property to hike the cost of not using land available for construction. Increasing residential density, ensuring that municipalities penalise landowners and developers for non-use of building permits, and phasing out or reducing the tax deductibility of mortgage interest should also be considered.
To improve inclusiveness, Luxembourg can directly finance new land acquisition by public providers of social housing and better use means testing to target its provision. Linking housing allowances and social housing rents to local rents is also recommended.

Fiscal policy should support growth and economic dynamism while ensuring the sustainability of public finances. For example, continuing the move toward higher taxes and excise duties on transport fuel – especially on diesel – combined with flanking measures over the short term for the most affected poor households, will address congestion and climate change risks while creating new revenue streams.

The Survey notes that stronger productivity growth will above all require enhanced training so as to continually upgrade the skills of the workforce. In addition, modernisation of bankruptcy law would ease early restructuring and second chance opportunities and facilitate the exit of non-viable firms. Elimination of restrictions on advertising and marketing in professional services would boost competition. Also, promotion of cutting-edge technologies by public sector users would boost adoption by businesses.

Luxembourg’s economy has grown at a robust pace and has enviable levels of well-being, but public policy can do more to make growth sustainable and inclusive, according to a new report from the OECD.

The latest OECD Economic Survey of Luxembourg discusses the challenges of making housing more affordable and reviving productivity growth. The Survey projects economic expansion will continue, with growth of about 2% this year and 2.5% next, but cautions about the risks of a possible downturn.

The Survey, presented in Luxembourg City by OECD Secretary-General Angel Gurria, Luxembourg’s Finance Minister Pierre Gramegna and Housing Minister Sam Tanson, discusses the need to address financial sector risks, ageing-related pressures and use tax reform to support sustainable growth.
“Luxembourg is in an enviable position, with growth that outpaces its neighbours and high levels of well-being for its citizens,” Mr Gurria said. “The challenge facing policymakers today is to ensure that Luxembourg remains prosperous and that this prosperity is widely shared, through reforms that enhance economic resilience, inclusiveness and sustainability.” (Read the full speech.)
Reducing financial risks should be a priority, the Survey said. With rising household indebtedness creating vulnerabilities for families and banks alike, the Survey recommends Luxembourg introduce borrower-based macroprudential instruments, such as caps on loan-to-value or debt-service-to-income ratios, as foreseen in draft legislation.
It also underlines the need to further enhance financial sector resilience and foster the transition to a low-carbon economy. The disclosure of climate-related risks by financial intermediaries, in line with the recommendations by the Task Force on Climate-related Financial Disclosures, should be pursued. Further reinforcement of financial supervision, namely by continuing to monitor credit risks on intra-group bank exposures and to enhance on-site inspections and data collection on investment funds, is also necessary.
The Survey points out the need to make the housing market more efficient and more equitable. Tax policy can be used to boost housing supply, notably by reforming recurrent taxes on immovable property to hike the cost of not using land available for construction. Increasing residential density, ensuring that municipalities penalise landowners and developers for non-use of building permits, and phasing out or reducing the tax deductibility of mortgage interest should also be considered.
To improve inclusiveness, Luxembourg can directly finance new land acquisition by public providers of social housing and better use means testing to target its provision. Linking housing allowances and social housing rents to local rents is also recommended.

Fiscal policy should support growth and economic dynamism while ensuring the sustainability of public finances. For example, continuing the move toward higher taxes and excise duties on transport fuel – especially on diesel – combined with flanking measures over the short term for the most affected poor households, will address congestion and climate change risks while creating new revenue streams.

The Survey notes that stronger productivity growth will above all require enhanced training so as to continually upgrade the skills of the workforce. In addition, modernisation of bankruptcy law would ease early restructuring and second chance opportunities and facilitate the exit of non-viable firms. Elimination of restrictions on advertising and marketing in professional services would boost competition. Also, promotion of cutting-edge technologies by public sector users would boost adoption by businesses.

Luxembourg’s economy has grown at a robust pace and has enviable levels of well-being, but public policy can do more to make growth sustainable and inclusive, according to a new report from the OECD.

The latest OECD Economic Survey of Luxembourg discusses the challenges of making housing more affordable and reviving productivity growth. The Survey projects economic expansion will continue, with growth of about 2% this year and 2.5% next, but cautions about the risks of a possible downturn.

The Survey, presented in Luxembourg City by OECD Secretary-General Angel Gurria, Luxembourg’s Finance Minister Pierre Gramegna and Housing Minister Sam Tanson, discusses the need to address financial sector risks, ageing-related pressures and use tax reform to support sustainable growth.
“Luxembourg is in an enviable position, with growth that outpaces its neighbours and high levels of well-being for its citizens,” Mr Gurria said. “The challenge facing policymakers today is to ensure that Luxembourg remains prosperous and that this prosperity is widely shared, through reforms that enhance economic resilience, inclusiveness and sustainability.” (Read the full speech.)
Reducing financial risks should be a priority, the Survey said. With rising household indebtedness creating vulnerabilities for families and banks alike, the Survey recommends Luxembourg introduce borrower-based macroprudential instruments, such as caps on loan-to-value or debt-service-to-income ratios, as foreseen in draft legislation.
It also underlines the need to further enhance financial sector resilience and foster the transition to a low-carbon economy. The disclosure of climate-related risks by financial intermediaries, in line with the recommendations by the Task Force on Climate-related Financial Disclosures, should be pursued. Further reinforcement of financial supervision, namely by continuing to monitor credit risks on intra-group bank exposures and to enhance on-site inspections and data collection on investment funds, is also necessary.
The Survey points out the need to make the housing market more efficient and more equitable. Tax policy can be used to boost housing supply, notably by reforming recurrent taxes on immovable property to hike the cost of not using land available for construction. Increasing residential density, ensuring that municipalities penalise landowners and developers for non-use of building permits, and phasing out or reducing the tax deductibility of mortgage interest should also be considered.
To improve inclusiveness, Luxembourg can directly finance new land acquisition by public providers of social housing and better use means testing to target its provision. Linking housing allowances and social housing rents to local rents is also recommended.

Fiscal policy should support growth and economic dynamism while ensuring the sustainability of public finances. For example, continuing the move toward higher taxes and excise duties on transport fuel – especially on diesel – combined with flanking measures over the short term for the most affected poor households, will address congestion and climate change risks while creating new revenue streams.

The Survey notes that stronger productivity growth will above all require enhanced training so as to continually upgrade the skills of the workforce. In addition, modernisation of bankruptcy law would ease early restructuring and second chance opportunities and facilitate the exit of non-viable firms. Elimination of restrictions on advertising and marketing in professional services would boost competition. Also, promotion of cutting-edge technologies by public sector users would boost adoption by businesses.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Meet Cipta: the comic book hero using her powers to tackle bullying in schools

European Commission: the LED lights of your Audi A6 shall save our planet

4 key steps towards a circular economy

MEPs wants to increase research funding to €120 billion in 2021-2027

Concorde is a reminder that the only way for innovation is up

The financial crisis always prefers the south of Eurozone

How fintech is making investment accessible

The staggering loss of the Arctic Ocean’s oldest sea ice shown in time-lapse

What can Darwin teach the aviation industry about cybersecurity?

Cambodia: Giving back to UN peacekeeping

European tourism remains a strong growth factor

Paris is building the world’s greenest business district. What can other cities learn from it?

Mediterranean migrant drownings should spur greater action by European countries, urge UN agencies

From violence to dialogue: as land conflicts intensify, UN boosts efforts to resolve disputes through mediation

EU-US trade deal: Europe to Americanize its social model?

Crimean crisis: not enough to slow down European indices

Ukraine’s Poroshenko implicates NATO in his duel with Putin

Dieselgate: Parliament calls for mandatory retrofits of polluting cars

Liaison Officer – 2020

Combatting terrorism: EP special committee calls for closer EU cooperation

Germany’s fiscal and financial self-destructive policies

Better outreach to citizens needed to improve effectiveness of European Commission’s public consultations, say Auditors

Bugged Europe accepts US demands and blocks Morales plane

How do we build a #sustainableworld?

Draghi reveals how failing banks will be dealt, may cut interest rates soon

Medschool 4.0: how to succeed in the smart revolution of healthcare

EU prepares a banking union amidst financial ruins

A Young student assesses the Programme for International Student Assessment (PISA)

Deadly violence at Israel-Gaza border escalates dangerously: UN chief condemns in strongest terms

FROM THE FIELD: Children in warzones denied right to education

MEPs call for decisive action to fight inequalities in the EU

Is there a de facto impossibility for the Brexit to kick-start?

Zuckerberg, a paella, and the mighty EU questionnaires that would stop Whatsapp acquisition by Facebook?

European Solidarity Corps: Commission opens new call for project proposals

The end of Spitzenkandidat: EU leaders concluded unexpectedly on EU top jobs

Smart cities must pay more attention to the people who live in them

UN will do ‘utmost to prevent and mitigate any risk of violence’ in DR Congo, pledges Mission chief

European Parliament gives green light to Christine Lagarde

Everyone has ‘a moral imperative’ to uphold the rights of persons with disabilities, says UN chief

The status of the Code of Medical Ethics: loading

Brexit: European Council adopts decision to extend the period under Article 50

‘We need to do more’ to transform the world, deputy UN chief tells African audiences

Environmental labelling, information and management schemes are central to the circular economy

European Parliament and Eurovision sign partnership for European Elections

The G7 should take the lead on ocean targets for 2020

UN welcomes ‘milestone’ release of 833 Nigerian children from anti-Boko Haram force

Rising human trafficking takes on ‘horrific dimensions’: almost a third of victims are children

European Agenda on Migration: Still fragile situation gives no cause for complacency

Galileo and EGNOS programmes back in orbit powered with €70 billion

India’s strategy in space is changing. Here’s why

Young and unemployed the perfect victims of ‘vultures’

MWC 2016 Live: Roshan CEO opens up on Afghanistan challenges

MEP Cristiana Muscardini @ European Business Summit 2014: International Trade in Europe

European markets itchy with short-term disturbances

Humanitarian Aid: EU mobilises €6 million for people in need in Colombia

Intel, Almunia and 1 billion euros for unfair potatoes

AI can be a game-changer for the world’s forests. Here’s how

3 ways to make the 2020s the decade we close the gender gap

This is the critical number that shows when housing breaks down

Privatization of the health sector and the right to receive treatment

More Stings?

Comments

  1. I am studying the economic situation in Luxembourg. Your article is very interesting and useful for me. Thank!

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s