Luxembourg - Future trends

Luxembourg is well positioned to continue its economic transformation from an industrial to a diversified economy with financial services as the base of the country's wealth. The close relationship between government and corporations and the pro-business stances of major political parties ensure that there will be little economic instability in the coming years. The continued economic integration of the EU will open new markets for the Grand Duchy's financial services, especially for pension plans.

The main danger facing the economy of Luxembourg is the possibility of labor wage inflation caused by a shortage of labor. However, the continuing momentum toward open borders and the free movement of people within the EU should ensure a steady supply of new workers. A second danger is that the harmonization of EU banking and tax laws may mean that the Grand Duchy will lose its special status as a tax haven. The concentration of banking and financial services may compensate for this trend, especially if U.S. companies and financiers continue to invest in the nation.