World Economy

EC Wants Luxembourg to Remove Investment Barriers

EC Wants Luxembourg to Remove Investment BarriersEC Wants Luxembourg to Remove Investment Barriers

The European Commission said that Luxembourg should remove barriers to investment and innovation, remove regulatory restrictions in the business services sector and act on its pension system.

These recommendations for Luxembourg were published by the Commission on Monday in the framework of the European Semester—the EU’s annual cycle for economic policy coordination. The recommendations will have to be adopted by the European Council, euobserver reported.

While the commission generally agrees with Luxembourg’s current economic policies and merely issued two recommendations for the Grand Duchy, its criticism targeted some areas that it says Luxembourg has been neglecting for some time.

Overall, the commission believes that the ‘’the macroeconomic scenario underpinning (Luxembourg’s) budgetary projections in plausible,’’ but that the country was too optimistic in its 2018 projections and too pessimistic in its 2021 projections.

The first major concern for the commission is related to ‘’long-term fiscal sustainability (…) given the projected increase of ageing costs.’’ The commission expects Luxembourg’s pension system to record a negative balance from 2023.

Possible future problems with the pension system have been under discussion for some time in Luxembourg. Especially the age structure in the society are a matter of concern and recently revised Eurostat population projections lead the commission to believe that a fast increasing dependency ratio will lead to a higher projected increase in public expenditure for pensions.

Luxembourg is the only EU member state where no increase in the statutory retirement age has been laid down for the period between 2013 and 2060, despite the fact that it has the union’s highest projected increase in the share of dependent population by 2060.



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