Luxembourg has long enjoyed one of the highest levels of GDP per capita in the world thanks to its thriving financial services sector and flexible approach to the development of the economy. Long-term planning for diversification coupled with national consensus on the broadest aspects of economic policy – including the so-called Luxembourg Model of tripartite meetings between government, employers’ and employees representatives – have given the Grand Duchy’s economy room to flourish and also allowed the government to react quickly to crises.
Government policy has sought to encourage a healthy business environment, with appropriate fiscal and regulatory frameworks. The highest levels of personal income tax are at the lower end of the European scale and a series of other incentives to help families have also been introduced as part of the effort to attract and retain a motivated and contented workforce. Indeed, some 149.000 workers pour into Luxembourg from neighbouring countries France, Belgium and Germany every day – testimony to the Grand Duchy’s economic pulling power in the so-called Greater Region. But Luxembourg has always been prudent with its state finances, and was the first country to meet the strict economic criteria set out in the Maastricht Treaty for monetary union.
The size of the country and close-knit nature of its communities means that the relevant authorities are easily accessible and personal business contacts are quickly established. The Luxembourg Model has also restricted social conflict as a climate of continuous and constructive dialogue has been encouraged and nurtured. Luxembourgers, by their nature, are also keen to establish contacts abroad, broaden their horizons and learn about business culture in other markets around the world.