Luxembourg has climbed six places in the IMD World Competitiveness Ranking 2026, re-entering the global top 15 after years of decline. The recent tripartite agreement and corporate tax cuts signal a step forward, but can the country turn this statistical upturn into lasting economic resilience? With unemployment rising, skills mismatches growing, and structural reforms still pending, the real test lies ahead.
Carlo Thelen, economist and director general of the Luxembourg Chamber of Commerce, voices his concerns about the country in his famous Blog.
Luxembourg has signed a Tripartite agreement “Resilienzpak” between the Government and social partners on June 8th, 2026. 430 – 450 mio. € will be spent in the coming two years on investment incentives, housing support measures and aid for consumption like direct assistance to vulnerable groups or reduced VAT rates. Corporate income tax rate will be reduced 1 % in 2027, a defence and a housing bond has been issued. Start-ups receive a tax credit. Additional tax income resulting from the expected growth are expected to finance the cost.
But structural reforms on labor cost and productivity, administrative simplification, fiscal sustainability are still missing. Housing remains a challenge, demographic aging has no solution, unemployment and skill mismatch wait for solutions.
Another issue is risk aversion: Luxembourg and Europe remain more risk-averse than the U.S., limiting dynamic investment in start-ups and scale-ups.
IMD World Competitiveness Yearbook 2026 puts Singapore, Hong Kong, Switzerland, Taiwan and UAE in the top spots of the 70 ranked economies. Slovenia (49.), Croatia (53.), Bulgaria (56.), Romania (61.) and Greece (50.) are ranked in the region. Luxembourg ranks 14., Belgium 32.
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