"A new dynamic for our country"

"With this relaunch budget, the government wants to give confidence to citizens and businesses. We keep increasing the purchasing power of households. We are also strengthening the competitiveness of businesses. With this budget, we are supporting the construction of a modern and attractive country by investing primarily in growth areas for Luxembourg. With this solid, solidarity-based budget, we are paving the way for us to emerge from the crises of recent years with our heads held high," explains Gilles Roth.

A difficult geopolitical and macroeconomic context

This budget is set against a difficult geopolitical backdrop. Numerous conflicts, such as the war in Ukraine and the Israeli-Palestinian conflict, are having a direct impact on our economic fundamentals.

After a year of recession in 2023 (-1% of GDP), Statec is forecasting timid growth in Luxembourg's GDP (+2%) in 2024, compared with just 0.6% in the eurozone.

The inflation rate is expected to be 2.2% in Luxembourg. The unemployment rate, meanwhile, continues to climb, reaching 5.9%, while employment is up by just 1.3%.

Key figures: a solid basis for a sustainable recovery from the crisis

Revenue and expenditure of the Central government

It is against this backdrop that:

• The revenue of the Central government will increase by €1.8 billion (+7.1%) compared with 2023, to €27.5 billion.
• Expenditure of the Central Government amounts to €29.4 billion (+€2 billion or +7.6%) - by 2023, expenditure had risen by a further 11.5%.

While in 2024 the rise in expenditure slows down and approaches the rise in revenue, the government expects the negative 'scissors effect' to be reversed, with revenue rising faster than expenditure in 2025.

Deficit of the Central government

For 2024, the Central government deficit will be €-1.9 billion. While Central Government deficits will have increased by around €500 million each year between 2021 and 2023, this increase will be curbed for 2024 (+€205 million). The opposite trend can be observed from 2025 onwards.

It can be seen that, compared with the scenario presented by the Inspectorate General of Finance to the formateur in October 2023, the new government's budgetary policy has succeeded in absorbing part of these deficits at the end of the year (-3.6 billion euros vs. 1.9 billion euros).

Balance of other public administration sub-sectors

In 2024, local government showed a balance of €+62 million euros, while social security showed a surplus of 1.05 billion. Taking into account Statec forecasts for domestic employment, the latter will fall over the years, reaching just €+261 million in 2027.

General government deficit

The general government balance (central government, local government and social security) showed a deficit of just under €1 billion.

Public debt

Between 2018 and 2023, public debt rose steadily. It will rise from €22.2 billion (26.5% of GDP) in 2024 to €26.5 billion (27.3% of GDP) in 2027, which means that public debt will flatten out in terms of GDP over the course of the legislature.

Budget priorities

Government has set its priorities on:

• supporting people's purchasing power,
• strengthen the competitiveness of its economic infrastructure,
• investing in the country's attractiveness and social cohesion,
• tackling the crisis in the housing and construction sectors.

As a result, investment remains at a high level, reaching €4 billion by 2024. En conséquence, l'investissement reste à un niveau élevé, atteignant 4 milliards d'euros d'ici 2024.

Similarly, the budget is a strong response to the crisis in the housing and construction sector. The new tax measures, the review of individual grants and the new programme of State acquisition of sales in future state of completion amount to €845 million for the period 2024-2027.

Social cohesion and living together is another of the government's priorities, reflected in this budget.

• Social transfers accounted for 47% of total expenditure.
• The Children's Future Fund will receive €1.5 billion to pay family allowances, parental leave and back-to-school and birth allowances.
• The State's contribution to the social security budget will increase by 12%. Expenditure by the Employment Fund amounts to €1.1 billion. Almost half of these appropriations (€499 million) are used to pay unemployment benefits.

Finally, the budget underlines the government's commitment to international solidarity.

• In 2024, the defence effort will amount to 0.83% of GDP, compared with 0.77% initially forecast. The related credit is €696.3 million, of which €69.5 million is earmarked for Ukraine.
• 1% of gross national income is earmarked for development cooperation.

A relaunch budget to boost confidence

To sum up, the budget for 2024 is:

• A budget of tax and administrative relief. For our citizens and businesses.
• A budget for solidarity. In Luxembourg and with our partners abroad.
• A solidarity budget. In Luxembourg and with our partners.
• An investment budget. In the fields of the future. Our infrastructure. The digital world. The energy transition. Our future.
• An efficiency budget. In the way we spend.
• A budget for sustainable public finances.

"With this relaunch budget, we are restoring the confidence of businesses and our fellow citizens. It is our duty not to compromise the future of future generations", Gilles Roth stresses.

Press release by the Ministry of Finance