Luxembourg's regional subsidy programme has failed
Sandra Seitamaa, Unsplash
As part of a parliamentary enquiry, MP Joëlle Welfring raised the question of the effectiveness of the enterprise assistance programme aimed at regional development in Luxembourg. The response of the Minister of Economy, SMEs, Energy and Tourism, Lex Delles, sheds light on the successes and limitations of this initiative.
The Regional Subsidies Programme is part of a pan-European strategy to support economically underdeveloped regions. The main objective is to stimulate investment and job creation in less developed areas, which should compensate for the inconvenience for companies that decide to develop business in such areas.
In 2021, the European Commission approved an updated regional aid map for Luxembourg for the period from 2022 to 2027. However, in a country with a small territory and relatively uniform economic development, it is difficult to identify clearly "weak" regions, which narrows the scope of the programme.
According to the minister, only two applications for subsidies have been submitted since the programme was launched in 2017. Both applications came from large industrial enterprises. The first subsidy totalled EUR 6.5 million, the second EUR 5 million. About EUR 3.4 million of the allocated funds were paid out for the implementation of one of the projects.
The Minister noted that the national policy on state aid aims to support initiatives with a horizontal orientation - such as research, innovation and green transition projects. There are also separate support programmes for small and medium-sized enterprises.
As such, regional assistance programmes are rarely used, as companies are more likely to seek support through larger programmes related to technology development and sustainable production.
While the government continues to support the availability of this measure, there is no active promotion of the programme at this time. It is expected that other types of subsidies can more effectively stimulate investment and align with the country's strategic goals, including digitalisation and environmental transformation.
