"Kurs op muer. Ee Muer fir Jiddereen" – Gilles Roth presents the State budget for 2025

Under the slogan “Towards a tomorrow for everyone” (in Luxembourgish: “Kurs op muer. Ee Muer fir Jiddereen”), the 2025 budget reflects the ambitions set by the government in its first transitional budget for 2024. New drive, economic boost, and confidence, combined with tax relief, solidarity with those most in need, an ambitious investment programme, and enhanced efficiency and security – these are the main themes of this budget.

Gilles Roth pointed out: 'We're keeping our sights on tomorrow. A tomorrow for everyone. We want to strengthen Luxembourg and its citizens for the future. We want to hoist our sails with optimism and confidence. And even if we haven't yet weathered all the storms, we can see that things are moving in the right direction.'

An uncertain geopolitical context. Positive macroeconomic trends.

The 2025 budget is set against an uncertain geopolitical backdrop, Making it all the more urgent for Luxembourg to do its homework. After a recession in 2023 (-1.1% of GDP), Statec forecasts GDP growth of +1.5% in 2024 and +2.7% in 2025. Inflation will fall to 2.3% in 2024. Eurozone inflation was down to +1.8% year-on-year in September. A more accommodating monetary policy is on the horizon.

Despite these positive trends, employment statistics have not yet reflected the growth. Employment growth is forecast to slow to 0.9% in 2024 and the unemployment rate to rise to 6% in 2025.

Key figures for the 2025 budget – Sustainable public finances thanks to a ‘positive jaws effect’ at the Central government level and a downward trajectory in public debt from 2025 onwards

Revenue and expenditure of the Central government

In comparison with 2024, Central Government revenue will increase by €1.5 billion (+5.2%) to €29.6 billion. Central government expenditure amounts to €30.9 billion (€1.4 billion or +4.5% compared to 2024).

Goal achieved. The ‘jaws effect’ is now positive, with revenues growing faster than expenditure in 2025.

Deficit of the Central government

For 2025, the Central government deficit will be €-1,29 billion. Compared with the projections for 2025 set out in the 2024 multiannual programme, this represents an improvement in the balance of more than €500 million.

General government deficit

Despite the improvement in the Central government deficit and a positive local government balance, the general government balance will remain negative throughout the period 2025-2028.

Public debt

While public debt increased by 6.6% of GDP between 2018 and 2023, it falls to 27.5% of GDP in 2024 and 2025 and then begins a downward trajectory until 2028.

Budget priorities

The objective of strengthening Luxembourg is reflected in the priorities of this budget.

1. A budget for an inclusive and supportive Luxembourg. With fair opportunities for everyone. Supported by a strong welfare state.

Social policy – Combating poverty and alleviating the burden on citizens through various policies

The fight against poverty is an absolute priority for this government.

• Social transfers still account for 47% of central government spending.
• 15% of the budget is earmarked for pension schemes. The State's contribution to the pension fund is €2.7 billion, +5% compared to 2024.
• A budgetary policy to combat poverty and support the most disadvantaged.

Housing – Promoting a wider offer, especially of affordable housing

The focus of this budget is clearly on affordable housing.

• Expenditure on the Special Fund for Affordable Housing increases by €130 million compared to the 2024 budget.
• Over the period 2025-2028, €2 billion will be invested in the development of affordable housing.
• Under the VEFA acquisition programme, which has a total budget of 480 million euros, 152 homes have been acquired up to September 2024.
• New: registration fees for the purchase of an existing or new property will be halved between 1 October 2024 and 30 June 2025.

Education

Our education system is the foundation of tomorrow's society.

• The budget for the Ministry of Education has been increased by €330 million to more than €4.4 billion.

Employment and purchasing power

Measures to improve working conditions and support families

• With higher net incomes thanks in particular to an average reduction in the tax burden of 17.4% since 1 January 2024.
• The Children's Future Fund provides more than €1.5 billion in financial support for families.
• Employment Fund expenditure of €1.2 billion. +35 million euros compared to the 2024 budget.

2. A budget with substantial investments in our mobility, our healthcare system and climate protection in the broadest sense.

State investment accounts for around 4.6% of GDP or €3.9 billion in 2025.

Rail

• Revenue from the Rail Fund increases from €605 million in 2024 to €780 million in 2028 (around +30%).
• State funding for buses including the RGTR, TICE and CFL will amount to around €390 million in 2025.
• 82 million for the transport of people with special needs. 53 million for school transport.

Roads

The Roads Fund will increase from €395 million in 2025 to €480 million in 2028. (+22%)

Public buildings

Priority investments include lycées, with €740 million over the next 4 years.

Hospitals

The Hospital Fund envelope will increase by +21% to €156 million. In 2025, substantial expenditure is planned for the new CHL, the Südspidol and the extension of the CHdN emergency department.

Energy, climate and environment

Investing in our future means protecting our climate and biodiversity.

• By 2025, the three main funds of the Ministry for the Environment, Climate and Biodiversity will have invested more than €510 million.

3. A budget for a more competitive economy and a healthy financial centre

The government intends to restore our economy's competitiveness and strengthen our financial center's attractiveness. This is essential for the financing of our welfare state:

• 52 million euros will be invested in the development of our business parks in 2025. 172 million over the period 2025-2028;
• Implementation of the national energy and climate plan will amount to €1.3 billion over four years, of which €174 million will be made available to the Ministry of the Economy;
• Financial support of €110 million over ten years for two hydrogen production projects;
• Increase in Innovation Fund expenditure of around €23 million;
• Participation in the IRIS project to the tune of around €155 million over 25 years;
• 272 million for agriculture.

4. A budget for a modern country and an efficient state

The government continues to invest in modernising the country with a focus on:

• Digitalisation:
  • 282 million euros of expenditure in 2025 for all ministries and State administrations;
  • 700 million euros for the CTIE over the next few years;
  • 8.7 million euros over 4 years for the national data exchange platform;
  • 7.9 million euros for the national e-Health strategy.

• Efficient local authorities:
  • A global endowment fund for local authorities rising to €3.2 billion. +119 million euros compared to 2024;
  • An increase of €69.5 million in funding to support local authorities in investing in basic infrastructure.

5. A budget for a safe country

Never before has Luxembourg invested so much in the security of its citizens, while remaining committed to the rule of law.

• The CGDIS budget will increase by 40 million euros in 2025;
• Current expenditure (excluding personnel costs) for the police amounts to 63 million euros. +4 million euros.

6. A budget for Luxembourg in Europe and the world

The government intends to stay the course in Europe, to be more present in the world and to show solidarity with its partners.

• Our defense efforts are on track to reach 2% of GNI by 2030. Expenditure of €792 million in 2025. +94 million euros over one year. In addition, there will be €80 million in support for Ukraine.

A budget for the future, focused on tomorrow

This budget seizes the opportunities of today to keep us on course for tomorrow:

• For more recovery and growth;
• For greater prosperity and relief;
• For greater equity and the fight against poverty;
• For greater quality of life and mobility;
• For greater sustainability and climate transition;
• For more digitalisation and artificial intelligence;
• For more sustainable public finances;
• For greater confidence;

For a future for everyone.

Press release by the Ministry of Finance