Luxembourg's budget in 2025: hydrogen energy, records and investments

Macroeconomic indicators

The central government deficit continues to decline and public debt is stabilising. Debt is projected to be 27.5% of GDP in 2025, and is scheduled to fall to 26% by 2026. Economic growth is forecast at 1.5% in 2024 and 2.7% in 2025, while inflation is projected to rise from 2.3% to 2.6%. The unemployment rate will rise to 6 per cent.

Social policy

About 47% of the budget will be spent on social transfers. Among them, 15% will go to help the elderly. The energy premium will be tripled and electricity price increases will be capped at 30%. Support for families will be strengthened by increasing the tax credit for single parents.

Public expenditure

Total public expenditure will increase to 30.9bn euros. Revenues will be €29.6bn, resulting in a deficit of 1.29bn euros. This is 500m euros less than expected. The social protection budget will fall from 937m euros to 657m euros, but will remain in surplus.

Taxes

The state has adapted tax rates to take account of indexation. 2.5 tax points will be adapted at the beginning of 2024, and then another 2.5 points at the beginning of the following year. The tax credit for single parents will also increase.

Housing policy

The housing fund will receive 461 million euros and the total investment in the sector for 2025-2028 will be 2 billion euros. Also planned are 630 million for the purchase of real estate and 117 million for the implementation of the Housing Pact 2.0 with the participation of communes.

Education

The budget of the Ministry of Education will increase by 330 million euros, reaching 4.4 billion euros in 2025. Support for children and families will also be strengthened by increasing funds for school vouchers and other forms of assistance.

Family policy

Around 1 billion euros will be spent on child benefits, 422 million on parental leave and 33 million on school benefits. Measures to support families, including increasing benefits and creating additional conditions for improving the quality of life, feature prominently in the budget.

Health care

Tobacco prices will be raised again by 5.5%, following a 2.7% increase in the previous year. The hospital fund budget will increase by 21% to 156 million euros. In addition, funding for the renovation and expansion of medical facilities is envisaged.

Investments

Investments will amount to 4.6% of GDP, equivalent to €3.9 billion. Investments in rail transport will amount to 512 euros per person, thus setting a new record in Europe. Major investments in transport infrastructure and public transport projects are also planned.

Energy and climate

510 million euros have been allocated for water, environmental and climate projects. The plans include spending 1.3 billion euros on the national energy and climate plan until 2028, as well as 110 million for hydrogen pilot projects and 41 million for the development of charging stations.

Digitalisation

282 million euros will be allocated for digitalisation in 2025, of which 5.3 million euros will be spent on the development of LU-CIX to strengthen the country's digital infrastructure. One of the key projects will be a "once only" platform that will simplify administrative procedures.

Safety

Luxembourg will significantly increase its investment in safety in 2025. Funds for rescue services will be increased by 40 million euros and Air Rescue will receive a third helicopter for 2 million euros. The police will also receive an additional 63 million euros, 4 million more than this year.

International assistance and defence

Development aid is allocated 1.39% of GDP. It is planned to increase defence spending to 2% of GDP, which will amount to 792 million euros in 2025.