Luxembourg: Financial services prosper
Growth has remained strong for the third year running, reaching a pace of more than 5% in 2006 on the back of strong activity in the financial and business services sector. Exports of financial services have continued to prosper, reflecting the positive sentiment in financial markets. Employment growth has accelerated and become more broad-based. Nevertheless, unemployment continues to rise as most jobs are being filled by cross-border workers, while domestic hires barely keep pace with expanding supply.
To boost job search activity of residents, the access conditions to unemployment benefits should be tightened and unemployment benefit replacement rates gradually reduced after a certain period of benefit receipt. To improve long-term sustainability of public finances, the recent revenue increasing measures should be replaced by expenditure restraint.
|Population (000s), 2005||455|
|Area (000 sq km)||3|
|GDP (Billion USD), 2005||30.9|
|Life expectancy at birth (Women, Men), 2003||81.0, 75.0|
|Total labour force (000s), 2005||317|
|Government type||Constitutional Monarchy|
|Indicators||% change unless otherwise indicated|
|Consumer price index||3.3||2.0||2.2|
|Unemployment rate (%)||4.6||4.7||5.0|
|General government financial balance|
No. 258/259, December 2006