Chamber of Commerce calls for moderation in public service

The Chamber of Commerce is concerned about the country’s economic and financial situation. The government’s growth estimate for Luxembourg’s economy of two percent for 2024 is more optimistic than that of the EU Commission and the Monetary Fund. Depending on the scenario, national debt could rise to over 30 percent as early as 2027.

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“It is important to be careful so that the financial scope for action does not disappear due to increasing interest burdens,” says Carlo Thelen. The director of the Chamber of Commerce presented the Chamber of Commerce’s report on the 2024 budget on Monday. Above all, the fact that the central administration’s expenditure, at 7.6 percent, is growing faster than income at an estimated 7.1 percent, brings worry lines to his forehead.

This gap has been widening since Covid and the energy crisis. In Tripartite negotiations, one must now be careful not to use the watering can too much. “Aid packages must be more targeted,” demanded Thelen.

The deficit of 1.9 billion euros expected for 2024 is primarily due to the fact that the state does not have its running costs under control. Similar to the National Finance Council, the Chamber of Commerce is bothered by the rapidly rising costs of public services. She is now also calling for moderation in the replacement of retirees and new hires and suggests promoting efficiency and digitalization.

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The economic situation of the companies is not rosy

“Luxembourg was in a technical recession in 2023. The confidence of companies has fallen, the economy is only slowly picking up again and the milk cow of the economy, the financial sector, is also suffering,” said Carlo Thelen, describing the situation. In addition, fewer and fewer companies are being founded and voluntary liquidations are increasing. “Many companies with fewer than five employees simply close down.”

This is due to the administrative effort and over-regulation, but also to the high number of sick reports, numbers that have never recovered after the Covid pandemic. “Annual working hours have fallen by 174 hours in two years – due to illness and more vacation. That’s good for the work-life balance, but difficult for companies, especially small ones.”

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The profitability of companies and their productivity are falling and the ability to invest is suffering. “This development threatens to become structural. “Luxembourg is becoming increasingly less competitive,” warns Thelen. But there was also praise for the government: for its willingness to curb debt, for wanting to work with a medium-term budget target, for wanting to guarantee the competitiveness of companies with tax measures and for reforming the pension system and modernizing the health system.