Luc Frieden: Changing the State of the Nation
Luxembourg’s Prime Minister, Luc Frieden, has outlined a wide range of policies that could transform the social and economic landscape in the Duchy. They include measures to cut taxes, reduce bureaucracy and address Luxembourg’s pressing housing crisis. He has also revealed measures to address climate change and advance Luxembourg’s green credentials.
What is the background for the Prime Minister’s policy announcements?
In his State of the Nation address, Luxembourg’s Prime Minister Luc Frieden set out his ambitious plans. He seeks to remove barriers to growth including tax cuts, cutting red tape, and placing housing at the top of his agenda. However, his announcements about domestic reforms were made against the background of current economic and security threats. To that end, he declared that Luxembourg’s future prosperity lay within a European Union that was competitive with the US and China. His fiscal measures to promote growth include a tax reduction for households and slashing corporation tax from 17% to the international average of 16%. If security was to be assured, he reiterated the Duchy’s support for Ukraine and committed Luxembourg to raise defense spending to the NATO target.
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“Luc Frieden seeks to remove barriers to growth including tax cuts, cutting red tape, and placing housing at the top of his agenda."
What are the Prime Minister’s plans to help resolve Luxembourg’s housing crisis?
Luc Frieden told the Chamber of Deputies that addressing housing problems in Luxembourg are his “first priority.” He singled out a resolution of the housing shortage for particular attention. His government proposals to increase the housing supply include changes reducing the waiting times for planning permission from a year to eight months and a public purchase program to augment housing development. The introduction of the “silence means agreement principle” and standard national building regulations by 2025 are measures that he hopes will accelerate building plans. The ideas envisage bringing banks on board and allowing developers to build on government land. The aim of this is to encourage increased private investment in housing development.
What are the government’s commitments to the “green economy?”
Mindful of the cost-of-living crisis, largely driven by surging energy prices, the government will maintain the energy price cap until next year. Promoting his sustainability agenda, Luc Frieden has committed his government to advance the “green economy.” It will allocate €25 billion to accelerate the transition to net-zero carbon usage as part of its National Energy and Climate Plan. The housing climate bonus to encourage environmentally friendly homes will be maintained. The mobility climate bonus to support the purchase of an electric vehicle will be capped at €6,000. The car will now have to be kept for three years to qualify for a subsidy.
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