Luxembourg's reputation is as a trustworthy political and economic partner. The economic
policy of Luxembourg is characterised by the highly professional
and dynamic spirit of the country.
Historically, the economy has been largely influenced by the steel
industry. In the early 1970s the government made significant efforts to diversify the economy in order to avoid the risk of over-reliance on this one
industrial sector and diversify and attract foreign multinationals. As a result of this reform,
the economy of the country has been growing rapidly
and nowadays relies on a much broader broad range of industries such as chemistry,
plastics and synthetic materials, mechanics, machine construction, processing of ferrous, non ferrous metals, supplying parts to
the automotive industry, precision instruments, as well as a burgeoning
glass industry. All these industries improve
the competitiveness of Luxembourg on the international market.
The most significant part of the Grand Duchy’s economy is its flourishing financial sector which comprise of 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 in the world.
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 and a highly suitable jurisdiction for holding companies. These holding companies are often very advantageous from a structural, administrative,
financial and fiscal point of view.
Insurance, private pension funds, securitisation and venture capital
investment vehicles also represent a large part of the financial sector and as a result have increasingly become a main source of employment.
As a result of its continuous economical growth, Luxembourg residents have very favourable standards of living,
with the one of the highest GDP (Gross Domestic Product)
per inhabitant (approximately EUR 50 800 per inhabitant) and the highest social welfare per head. There is low inflation,
low unemployment and a balanced budget.
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