Luxembourg experienced a year of significant developments and milestones in 2024, spanning various sectors including economy, politics, healthcare, employment, tourism, and infrastructure. The small but dynamic European nation continued to adapt to changing global dynamics while maintaining its position as a key player in the European Union.
Economic Landscape
Luxembourg's economy showed mixed signals in 2024. The country's GDP grew by 3.8%, demonstrating resilience in the face of global challenges. However, economic surveys indicated a deterioration in economic sentiment across various sectors. Confidence indicators for industry, retail trade, and non-financial services significantly worsened in July, reaching lows not seen in 7-10 months. The construction sector saw a slight improvement in optimism among entrepreneurs, though confidence remained below the long-term average.
The real estate sector saw a 44% increase in sales of existing flats over one year, indicating a recovery in the housing market. Mortgage credit applications also rose after nearly three years of decline, with the amount of credit granted for residential properties increasing by 9% year-on-year in the second quarter.
Political Developments
Following the 2023 elections, Luxembourg formed a coalition government led by Prime Minister Luc Frieden of the Christian Social People's Party (CSV) and the Democratic Party (DP). The government focused on addressing key challenges, including housing, economic competitiveness, and environmental sustainability.
The Chamber of Deputies passed the 2025 state budget with a narrow majority of 35 votes to 25, reflecting the government's priorities and sparking debates about tax revenue and social policies. Luxembourg also sought €58 million from the EU recovery programme as part of its second instalment request.
In June, Luxembourg participated in the European Parliament elections, demonstrating its commitment to EU integration. Later that month, on the Grand Duke's Official Birthday, Henri, Grand Duke of Luxembourg, announced that his son and heir Guillaume would begin assuming royal duties in October, signaling a gradual transition in the monarchy.
Employment and Job Market
Luxembourg's job market in 2024 exhibited robust growth, with a GDP increase of 3.8% and an unemployment rate of 4.2%. Job vacancies increased by 15%, with technology and finance sectors driving employment growth. There was a high demand for digital skills and sustainable practices.
However, recent data from ADEM (Luxembourg's employment agency) indicated a slight increase in unemployment. As of October 31, 2024, there were 18,293 resident jobseekers registered with ADEM, an increase of 1,366 individuals (or 8.1%) compared to October 2023.
To attract and retain talent, Luxembourg introduced a new expat tax regime. Starting January 1, 2025, expats will enjoy a 50% tax exemption on the first €400,000 of their gross annual compensation for a period of 8 years. Additionally, employees under 30 signing their first permanent employment contract in Luxembourg can receive an employer-granted bonus ranging from €2,500 to €5,000, benefiting from a 75% tax exemption.
Healthcare and Insurance
Luxembourg's healthcare system continued to perform well in terms of accessibility and overall health outcomes. The country is developing a Health System Performance Assessment (HSPA) framework to enhance strategic planning and policy development in the health sector.
The second edition of Healthcare Week Luxembourg, held on October 1-2, 2024, brought together a record 3,000 professionals from the Greater Region's healthcare sector. The event showcased innovative projects and emphasized the importance of digital technologies and interprofessional collaboration in transforming healthcare.
The government also focused on healthcare improvements, announcing a simplified reimbursement plan for hearing aids set to take effect in 2025. This change aims to make hearing aids more accessible to those in need.
In the insurance sector, life insurance premiums are expected to hit record highs in 2024, according to Marc Hengen, managing director of the Luxembourg Insurance and Reinsurance Association (Aca). The life insurance market has seen a remarkable turnaround after three years of stagnation. However, the non-life insurance sector faces challenges due to the unpredictability of natural disasters and geopolitical risks.
A new law modernizing the Luxembourg insurance sector came into force on April 6, 2024, bringing changes to professional and insurance secrecy regimes.
Tourism and Culture
Luxembourg's tourism industry flourished in 2024, with visitor spending reaching €3.756 billion in 2022, up 13% from 2021. The country's free public transport system, including buses, trains, and trams, made it easy and affordable for tourists to explore.
Visa-free travel is now available for citizens of 94 countries, including the United States, Canada, Mexico, Argentina, Brazil, Eal Salvador, and Paraguay. This policy has contributed to a record-breaking 1.4 million tourist arrivals in 2023, marking a 23.54% increase compared to the previous year.
Interestingly, domestic tourism saw a significant boost, with the number of stays by residents in Luxembourg increasing by 32% compared to 2019. The 'Lëtzebuerg, dat ass Vakanz!' campaign, numerous hiking trails, and the Vëlosummer initiative contributed to this growth in local tourism.
The country maintained its rich cultural calendar in 2024. The European Heritage Days, held from September 27 to October 6, focused on the theme "Routes, networks and connections," highlighting Luxembourg's role in European cultural routes. The event showcased eight certified cultural routes passing through Luxembourg, including the Santiago de Compostela Pilgrim Routes and the European Route of Industrial Heritage.
The Festival des Migrations, Cultures et de la Citoyenneté continued to celebrate Luxembourg's cultural diversity, featuring over 400 international stands at LuxExpo The Box. The event combined cultural exhibitions, debates, and artistic performances, emphasizing the country's multicultural identity.
Luxembourg is set to host its second Luxembourg Expat Day on September 1, 2024, at the Abbaye de Neimünster. This event aims to introduce expats, their families, and friends to Luxembourg's culture, offering activities, food, and networking opportunities.
Infrastructure and Urban Development
Luxembourg continued to invest in infrastructure and urban development projects throughout 2024. Creos announced a €350 million project to modernize its high-voltage network, upgrading the 48-kilometer line from Aach to Bertrange by 2029. The capital city saw ongoing redevelopment work in various districts, including Place Guillaume II, Rue de Strasbourg, and the Pétrusse Valley ecological restoration project.
In the realm of technology and innovation, Luxembourg made strides in various sectors. The LuxConnect site in Bettembourg was chosen to host a new EU satellite control centre as part of the IRIS² programme, reinforcing Luxembourg's role in European space initiatives. Additionally, Auchan Luxembourg introduced robots to prepare supermarket orders, showcasing the country's embrace of automation in retail.
Environmental Initiatives
Luxembourg remained committed to environmental sustainability in 2024. The country participated in European efforts to combat climate change and promote sustainable urban development. The Sustainable Places 2024 Conference, held in September, highlighted Luxembourg's role in advancing the built environment sector, showcasing innovative construction projects and research initiatives.
Environmental concerns remained a priority, with the Luxembourg Cancer Foundation calling for a ban on vapes and nicotine pouches as part of the 'Tobacco-Free Generation 2040' strategy. The country also faced challenges related to pollution, as seen in the Goodyear incident in Colmar-Berg, where the company offered clean-up services after soot spread across a neighborhood.
International Relations
Luxembourg maintained its active role in European and international affairs. The country continued to support Ukraine in its conflict with Russia, with Prime Minister Frieden attending a peace conference in Switzerland. Luxembourg also reaffirmed its commitment to spending 1% of GNI on development aid, emphasizing its role in global humanitarian efforts.
In September, Luxembourg welcomed Pope Francis for a one-day visit, marking the first papal visit to the country since 1985. This event highlighted Luxembourg's importance in the European religious landscape and fostered interfaith dialogue.
Challenges and Future Outlook
Despite progress in various areas, Luxembourg faced ongoing challenges in 2024. The housing market remained a critical issue, with the government working to increase affordability and supply. The country also grappled with the need to maintain economic competitiveness while addressing environmental concerns and social inequalities.
As Luxembourg moves forward, it continues to balance its role as a small but influential nation within the European Union, adapting to changing economic, technological, and social landscapes while striving to maintain its unique identity and high quality of life for its residents. The country's focus on innovation, sustainability, and cultural diversity positions it well for future growth and development in an increasingly interconnected world.
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