2025 State Budget Targets 'Tomorrow for All' in Luxembourg

On Wednesday 9 October 2024, Luxembourg's Minister of Finance, Gilles Roth, presented the 2025 state budget to the Chamber of Deputies (parliament).

Under the slogan "Towards a tomorrow for all" (Luxembourgish: "Kurs op muer. Ee Muer fir Jiddereen"), the 2025 budget aims to reflect the ambitions set by the government in its first transitional budget for 2024. As reported by the Ministry of Finance, the main themes of the 2025 budget are: new drive, economic boost and confidence, combined with tax relief, solidarity with those most in need, an "ambitious" investment programme and enhanced efficiency and security.

Minister Roth commented: "We are staying the course for tomorrow. A tomorrow for everyone. We want to strengthen Luxembourg and its citizens for the future. We want to hoist the sails with optimism and confidence. And even if we have not yet weathered all the storms, we can see that things are moving in the right direction."

The ministry noted that the 2025 budget is set against an uncertain geopolitical backdrop, although Luxembourg has been experiencing positive macroeconomic trends.

Key figures of the 2025 budget

Central government balance & public debt

Central government revenue is expected to increase by €1.5 billion (5.2%) compared to 2024, to reach €29.6 billion in 2025. Spending is set to rise to €30.9 billion, an increase of €1.4 billion (4.5%) compared to 2024.

For 2025, the central government deficit is expected to be €-1.29 billion. Compared to the 2025 projections set out in the 2024 multiannual programme, this marks an improvement in the balance of more than €500 million. However, the general government balance is expected to remain negative for the 2025-2028 period.

While public debt increased by 6.6% of GDP between 2018 and 2023, it is set to fall to 27.5% of GDP in 2024 and 2025, and then to continue on a downward trajectory until 2028.

Budget priorities

The Ministry of Finance outlined the following budget priorities:

1. "A budget for an inclusive and united Luxembourg, with fair prospects for everyone, and supported by a strong social state"

Social policy: social transfers will still account for 47% of central government expenditure; 15% of the budget is reserved for pension systems. The state's contribution to the pension fund will reach €2.7 billion (+5% compared to 2024).

Housing: spending on the Special Fund for Affordable Housing will increase by €130 million compared to the 2024 budget; from 2025-2028, €2 billion will be invested in the construction of affordable housing; registration fees for the purchase of an existing or new property will be reduced by half between 1 October 2024 and 30 June 2025.

Education: the budget for the Ministry of Education will increase by €330 million to more than €4.4 billion.

Employment & purchasing power: higher net incomes attribued in particular to an average reduction in the tax burden of 17.4% since 1 January 2024; the Children's Future Fund will provide more than €1.5 billion in financial support to families; Employment Fund expenditure is set at €1.2 billion - an increase of €35 million compared to the 2024 budget.

2. "A budget with substantial investments in our mobility, our healthcare system and climate protection in the broad sense"

State investments will account for around 4.6% of GDP or €3.9 billion in 2025.

Rail: revenue from the Rail Fund will increase from €605 million in 2024 to €780 million in 2028 (+30% approx.); state funding for buses including the RGTR, TICE and CFL will amount to about €390 million in 2025; €82 million dedicated to the transport of people with special needs and €53 million for school transport.

Roads: the Roads Fund allocation will increase from €395 million in 2025 to €480 million in 2028 (+22%).

Public buildings: priority investments include secondary schools ("lycées"), to the tune of €740 million over the next four years.

Hospitals: the Hospital Fund budget will increase by 21% to €156 million. In 2025, "substantial" expenditure is planned for the new CHL, the Südspidol and the extension of the CHdN emergency department.

Energy, climate and environment: by 2025, the three main funds of the Ministry of the Environment, Climate and Biodiversity will have invested more than €510 million.

3. "A budget for a more competitive economy and a healthy financial centre"

To be achieved as follows: €52 million will be invested in the development of business parks in 2025 (€172 million over the 2025-2028 period); implementation of the national energy and climate plan will amount to €1.3 billion over four years, including €174 million made available to the Ministry of the Economy; financial support of €110 million over ten years for two hydrogen production projects; increase in Innovation Fund expenditure by about €23 million; participation in the IRIS project to the tune of about €155 million over 25 years; €272 million earmarked for agriculture.

4. "A budget for a modern country and an efficient state"

To be achieved as follows:

Digitalisation: €282 million of expenditure in 2025 for all ministries and state administrations; €700 million for the CTIE (Government IT Centre) over the next few years; €8.7 million over four years for the national data exchange platform; €7.9 million for the national e-Health strategy.

Efficient municipalities: a global endowment fund for municipalities amounting to €3.2 billion - an increase of €119 million compared to 2024; an increase of €69.5 million in funding to support municipalities in investing in basic infrastructure.

5. "A budget for a safe country"

The CGDIS budget will increase by €40 million in 2025; current expenditure (excluding personnel costs) for the police amounts to €63 million (an increase of €4 million).

6. "A budget for Luxembourg in Europe and in the world"

Luxembourg's defence efforts are reportedly on track to reach 2% of GNI in 2030: expenditure of €792 million in 2025 - an increase of €94 million over one year. In addition, there will be €80 million in support for Ukraine.