Europe, but specifically Luxembourg, has to face some tough choices if it wants to have an economic future. Comments by Carlo Thelen, Director General of the Luxembourg Chamber of Commerce.
Caught between the hyper-attractive United States, able to draw in capital, talent and innovation through aggressive industrial policies, and on the other hand China with it’s hyper‑competitiveness, heavily supported by large state subsidies; Europe advances with difficulty — held back by sluggish growth, a productivity gap and layers of internal constraints.
In this explosive context, Luxembourg is particularly exposed. Its economic model — built on exceptional openness to trade, capital and international talent — becomes a vulnerability when the environment deteriorates. Recent Luxembourg economic national indicators confirm this reality. In 2025, growth did not exceed 1% far, from the historical average of 2.9%. Labor productivity fell by 2.9% between 2003 and 2023 in Luxembourg, while it rose by 21.1% over the same period in the European Union. Cost increases — especially wages — are no longer being offset by efficiency gains.
In this context, Prime Minister Luc Frieden announced to make 2026 the year of competitiveness.
The Economic chamber suggests
- to bring the overall corporate tax rate below the symbolic 20% threshold by 2030. To meet this objective, corporate income tax should be reduced by 1.5 percentage points in 2027 (a one‑point cut has already been announced) with a similar effort in 2028.
- control labor cost, with additional ambitious action on health insurance. It is not the moment to reduce working time
Find the full article on the Blog of Carlo Thelen here.
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