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Around noon, the fog will rise and turn into a haze. The sky will be covered for a short time. The day will be mostly sunny and dry. 

Temperatures will reach 19-21°C during the day and 13-15°C at night

No rain in Luxembourg

A charity run organized by the childhood cancer foundation Kriibskrank Kanner has raised a record amount of money for pediatric oncology research. The money will be donated 

 projects that aim to improve treatment outcomes and develop less invasive and more effective cancer treatments for young patients.

600,000 euros raised for childhood cancer research

The Democratic Party (DP) suggested lowering the corporate tax rate, which is currently 

. Other parties pointed to the country's geographical location and short administrative procedures as attractive factors. Creating more jobs in trade, taxing the population fairly, inheritance tax, and increasing purchasing power by eliminating taxes on various goods were also discussed.

Politicians debate taxation and attractiveness to foreigners

400 of the 750 students at Ermesinde Lyceum put their phones in a special box at the beginning of the day. They can pick them up at the end of the day. So far, the policy applies only to 

junior high school students and their teachers

. Secondary and high school students are allowed to carry their phones, but they can't use them inside the school.

Students in Mersch were left without smartphones

A team of researchers from Israel, including Luxembourg scientist Emilie Wildschutz, has created a male embryo from human stem cells. The embryo was grown ex utero for 14 days and was 

no different from a naturally created embryo

. This study may provide insight into the first weeks of pregnancy, a critical period when many miscarriages occur, but it also raises ethical questions about the differences between artificial and natural embryos.

Scientists have created an artificial embryo

🇱🇺 Gudde Moien! Bonjour! Guten Morgen! The main news by the morning of September 25

Luxembourg film to represent the country at the Oscars

Luxembourg to spend 50 million euros on urban sustainability

Luxembourgers work harder than any of their neighbors

Will Luxembourg fight shrinkflation

Coliving is a new trend in Luxembourg

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Labor Market

The European Commission has released a new labor market survey conducted by Eurostat. The indicators in it do not differ so much from the first quarter's results, but a positive dynamic is still observed. This suggests that the slack in the labor market has begun to decline.

In the second quarter of this year, 195 million people were employed in the European Union. The seasonally corrected overall employment rate was 75.4%, 1 percentage point higher than in the previous period. At that time it was 75.3%.

Accordingly, the number of persons without a job also fell by 1 p.p. to 11.2% of the full labor force or 23.9 million people.

Of course, the performance of the states is uneven. 16 states showed a decrease in the labor market slack down, 10 — an increase. The most significant fluctuations were recorded in Greece, Spain, and Croatia, where labor market slack down decreased by 0.9-1%. The strongest increase was recorded in Luxembourg with 1.3%. At the same time, however, the Grand Duchy ranks 7th in terms of employment growth.

Unfortunately, it is too early to talk about a stable trend of unemployment reduction, but there are conditions for its formation. Now it will be important to wait for the statistical data for the 3rd quarter, but we will probably get them in October.

Aleksandr Titov

European Comission

Europe's labor market is more agile in the second quarter of 2023

On the morning of September 13, the OGBL and LCGB unions announced a strike by Cargolux workers. The strike will begin tomorrow, September 14, but no end date has been announced.

The conditions for the strike were in place long before the official announcement. This is not the first month that the unions have tried to sign new collective agreements, but each time the negotiations have stalled.

For a long time, management ignored demands for wage increases, index guarantees, a new wage scale for ground staff, and a review of the rules governing remote work. By the 28th round of talks, the workers' patience had run out.

This is not the first strike by transport workers this year. It should be recalled that a little earlier in Germany, railway workers went on protest action. It happened on April 21 and affected the schedule of trains, including in the Grand Duchy. Even earlier, on March 16, Germans went on strike at airports. A strike by ground staff caused several major transportation hubs to shut down. Hundreds of flights were canceled as a result.

Another of Luxembourg's neighbors — France — also has frequent strikes. This year, the main unrest was caused by citizens' disagreement with Macron's pension reform. But the echoes reached the Grand Duchy as well. For example, during the nationwide strike that lasted several days, rail service, which is 

, was almost non-existent. In general, the French blocked rail traffic quite often in the first half of this year.

As for the Belgians, they turned out to be pretty quiet. Although there have been problems with transportation here as well. Last fall, for example, 

there was a series of strikes in the country that temporarily blocked the traffic of trains between the two countries

To come back to the case of Cargolux, it can be expected that the transport of passengers will not be affected by the strike. However, it could seriously damage the company's own economy and Luxembourg's transport infrastructure. Cargolux remains one of the largest and most trusted carriers in Europe, and a prolonged work strike would affect the company's reputation and finances.

Cargolux strike: how it threatens Luxembourg's air traffic

There will be a third wage indexation this year. This was reported by Statec with reference to the indicators of forecast inflation. According to the law, wages and pensions will be indexed if the sustainable inflation exceeds 2.5%. The new rates are expected as early as September 1.

The first two tranches took place on February 1 and April 1. They were part of the agreements reached in last year's tripartite meetings. The upcoming one could have been postponed until October 

if price growth in the Grand Duchy had slowed a little

And while wage and pension increases look promising, it should be remembered that these indexations have twice led to a rise in inflation. 

A particularly worrying trend is emerging in the food sector

It is clear that wage indexation should be only one of the methods to fight for the purchasing power of households, but by no means the only one.

Kadriia Sadykova

Delano

The third indexation will still take place in September

A gradual decline in inflation has been noted since last October. Based on the data received, it is obvious that various services regularly update their forecasts. This is what Statec is doing. The agency now predicts inflation at 3.9% in 2023, while next year the figure should fall to 2.5%.

The Luxembourg government has agreed with unions and employers on several wage indexations in response to rising prices caused by the energy crisis and last year's drought. The next one should take place in September, but it may not happen.

The truth is that the increase in employees' wages is based on a certain inflation rate. So if it is below 4.1% in August, the new indexation will be postponed to October.

For a long time, fuel prices have been a major contributor to the decline in inflation figures due to the negative base effect. Food and services are 

Statec

How inflation in Luxembourg could affect wage rises

The ECB raised its rate by 25 basis points on Thursday, July 27. The changes will already take effect on Wednesday, August 2. The refinancing rate was raised to 4.25%, while the deposit rate was raised to 3.75%.

The 3.75% deposit rate was the highest since 2000 when euro coins and notes had not yet been introduced. In response to complaints about the ECB's slow reaction to the first rises in inflation last year, ECB President Christine Lagarde said the institution was determined to "break the back" of inflation.

In general, economists believe that interest rate hikes have come to an end: there is now a discussion about whether further rate hikes are appropriate. The problem is that inflation is coming down too slowly.

There has been a chain reaction in other sectors of the economy from the initial growth in the energy sector. There are concerns that high inflation will continue into 2025.

Reuters

ECB raises the rate by 25 basis points

Eurostat has published an updated survey of food inflation in Europe and Turkey for June. Food price increases are visible and tangible in all countries for which indicators are available.

And while some figures may seem relatively small, we should not forget another important factor — the underlying costs.

The countries with the highest food inflation were Turkey (54.3%), Hungary (28.4%), and Serbia (24%). These figures show the monthly increase in the cost of products. Estonia, Slovakia, and Poland follow with a small gap. Luxembourg is not among the 10 worst countries on this list, but it is not in the top 10 either.

Food inflation in the Grand Duchy was 11.4%, which is quite good compared to Turkey's 50+%. However, we should not forget one important thing: 

Luxembourg's basic cost of goods and services is significantly higher than in most other countries

. Therefore, an 11% increase here may coincide with 15%, 19%, or even 20% increases in other countries.

A recent open letter from the Consumers' Union explicitly refers to the persistent negative publicity Luxembourg has received due to the fact that its citizens pay more for food than anyone else in the EU.

Food inflation, activists say, has the potential to wipe out all the tax credits and wage indexation because people won't have the time to cover rising food costs.

This brings us back to the conversation that 

 needs to be reviewed in the direction of greater fairness. And while many consider the Grand Duchy's taxes to be among the fairest in the world, the Sustainability Committee also recommends, if not reform, 

then at least a rebalancing of deductions

Product inflation can negate the effect of indexing?

The Scope rating agency has confirmed Luxembourg's "AAA" credit rating. The experts highlighted the country's stability and sustainability in times of crisis. Such a high rating once again confirms the competent budgetary management and the solid foundation of the Luxembourg economy.

The study notes that despite the crisis caused by the war in Ukraine, Luxembourg's GDP has every chance of growing in the coming years. There is also a downward trend in inflation. This is largely due to the control of energy prices.

The country's foreign debt also remains at an acceptable level. It is already close to 30% of GDP but still leaves room for manoeuvre in case of emergencies or unforeseen situations.

Luxembourg's Finance Minister Yuriko Backes has already reacted to the rating on her Twitter account: "Scope Ratings confirms Luxembourg's "AAA" credit rating with a stable outlook, highlighting the country's resilience, solid fundamentals and sound public finances".

Gouvernement.lu

The Minister of Finance of Luxembourg comments on the "AAA" rating of Luxembourg

The European Central Bank (ECB) has made an upward revision to its forecast for GDP growth in Luxembourg. What does this mean for residents? Most likely that there will soon be an improvement in the quality of life. GDP is very often used as an indicator, but it is not quite as simple as that.

Instead of 1.6%, Luxembourg's real GDP growth should be 1.8%. The economy is expected to return to its pre-pandemic growth path in 2024. GDP is projected to grow by 2.4%.

This means that the government will receive more taxes. More goods and services will be produced, wages will rise, consumer demand will increase and there will be a need to expand production and create new jobs. This is what usually happens. With a few tweaks.

The labour market, for example, is still on the verge of a slowdown. Employment growth is projected to decline from 3.5% in 2022 to 2.4% in 2023. It is expected that the unemployment rate will reach 5% in 2024. In a market that has gone through an economic crisis, this is a natural phenomenon. The construction sector is particularly vulnerable.

The unemployment rate, which is projected to fall to 4.6% in 2022, is expected to increase moderately to 4.8% in 2023 and to 5.0% in 2024.

Another global problem — inflation — will fall. It is finally starting to slow, after reaching 8.2% in 2022. Consumer price inflation is expected to fall to 3.2% in 2023 and to 2.6% in 2024. 

The European Central Bank published its economic forecasts on Thursday 29 June. The ECB publishes projections of economic growth, inflation and unemployment rates for member states twice a year, in June and December.

 according to which 63% of respondents in Luxembourg are satisfied with the cost of living. A total of 507 interviews were carried out in Luxembourg. This is almost twice the European Union average. It's interesting to note that the figures have hardly changed since the last survey in autumn. Last year, 62% of respondents were satisfied, compared with 33% for the EU as a whole.

The standard of living in Luxembourg is set to rise

A new study on the prices of consumer goods and services in 2022 has been published by Eurostat. Countries from Western Europe are expected to be the most expensive. The cheap ones are from Eastern Europe.

The country with the highest prices is Ireland. Here, the prices of goods and services reached 146% of the EU average. In second place are the Scandinavians: in Denmark, prices are just behind Ireland, at 145% of the EU average. Luxembourg is in third place with prices at 137%.

Romania, Bulgaria and Poland are the least expensive. Prices in these countries are 58 %, 59 % and 62 % of the EU average respectively.

The Eurostat survey covers 12 categories of products and services such as food and non-alcoholic beverages, alcoholic beverages and tobacco, clothing, footwear, electricity, gas and other fuels, household appliances and other groups.

It is worth noting that the dispersion of prices can be very different in different regions. In clothing and footwear, for example, Denmark has overtaken Ireland. 

, however, it is the Luxembourgers who are the highest payers. Bulgaria has the lowest costs in this category.

Of all the 36 countries surveyed, Switzerland leads the way for food and non-alcoholic beverages and for clothing. The most expensive alcoholic beverages are found in Norway, which also has the highest prices for tobacco. The most expensive shoes can be found in Denmark.

Among the EU Member States, Denmark is one of the countries with the highest prices for food, non-alcoholic drinks, clothing and footwear. For tobacco and alcoholic beverages, Ireland is the leader.

Switzerland is also the leading country in having the most expensive restaurants and hotels. Among the Member States of the European Union it is Denmark. At the opposite side, the lowest prices are found in Northern Macedonia and Bulgaria. Luxembourg could be found in the sixth place in this category. 

Eurostat

Luxembourg among top 3 countries with higher prices

From 1st January 2023, three VAT rates were reduced by 1%: the standard rate, the intermediate rate and the reduced rate. They will then be 17%, 13% and 7% respectively. The minimum VAT rate of 3% was not affected by the changes.

It turns out that only 50% of goods and services were covered by these measures. This is because the minimum rate applies in areas such as food and municipal payments. In addition, rents are not subject to the VAT rate. As a result, inflation fell by 0.18%. 0.07% of this was due to the VAT rate.

The smallest effect was seen in the beauty and restaurant sectors: Beauty salons, hairdressers and restaurants hardly lowered their prices. It is a completely different story in supermarkets. They overtook the car industry and speciality shops, with almost 60% of all food items falling in price.

In the end, the reduction in the VAT rate has certainly helped to curb inflation, but not as much as the government had hoped. The measure will remain in force until the end of the year, after which the rates will be brought back to their normal level.