Luxembourg
is known as a trustworthy political and economic partner. The economic
policy of Luxembourg is characterized by the highly professional
and dynamic spirit of the country.
Historically, its economy has been largely influenced by its steel
industry. In order to avoid the risk of over-reliance on this one
industrial sector, as well as to diversify the economy of the country
and to attract foreign multinationals, some significant efforts
were made by the government in early 70s. As a result of this reform,
the economy of the country has been growing considerably faster
and nowadays relies on a broad range of industries, such as chemistry,
plastic, synthetic materials, mechanics, machine construction, the
transformation of ferrous, non ferrous metals, the suppliers of
the automotive industry, precision instruments, electronic supply,
glass industry and wood transformation. All these industries improve
the competitiveness of Luxembourg on the international market.
The most significant part of the Grand Duchy’s diversified
economy is its flourishing financial sectors which comprise more
than 200 banks, 1,900 investment funds and 20,000 holding companies.
The largest banks are Dexia-Bil, Fortis BGL, Kredietbank Luxembourg
and a subsidiary of Belgian KBC. Luxembourg is considered to be
one of the most important financial centres in Europe that offers
the entire spectrum of financial services in both corporate and
private banking. It is the third largest investment fund centre
worldwide.
A highly competitive tax regime, strict banking secrecy laws and
international business environment have also made Luxembourg one
of the leading locations for corporate headquarters. In addition,
it represents itself as a suitable location for holding companies
that are often very advantageous from a structural, administrative,
financial and fiscal point of view.
Insurance, private pension funds, securitisation and venture capital
investment vehicles are another large part of the financial sector.
As a result of its continuous economical growth, Luxembourg is currently
considered to be a country of the most favourable standards of living,
with the one of the highest worlds GDP (Gross Domestic Product)
per inhabitant (approximately EUR 50 800 per inhabitant), low inflation,
low unemployment and a balanced budget.
Over the last 25 years, the employment is remarked by the outstanding
dynamism and the highest annual rate of increase in Europe. In this
respect, banks and investments funds are major sources of employment
in the Grand-Duchy. In addition, Luxembourg has the highest social
welfare spending per head in absolute terms.
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