Luxembourg economy at a glance

Latest figures for Luxembourg: inflation, growth, interest rates, jobs, bond yields, debt and taxes. Updated 6 November 2026. Open Luxembourg on the interactive map →

Key figures

Indicator	Latest	Period	Previous
Inflation (consumer prices, year on year)	4.9%	October 2026	5.2% September 2026
Core inflation (excluding food and energy)	2.0%	October 2026	2.3% September 2026
Real GDP growth (year on year)	1.3%	Q2 2026	2.8% Q1 2026
Policy rate (European Central Bank)	2.50%	November 2026	2.50% October 2026
Unemployment rate	7.3%	September 2026	7.3% August 2026
10-year government bond yield	3.70%	September 2026	3.40% August 2026
Retail sales (year on year)	2.2%	September 2026	10.0% August 2026
Industrial production (year on year)	−5.6%	August 2026	−4.1% July 2026
Wages (year on year)	1.8%	Q2 2026	3.9% Q1 2026
House prices (year on year)	−2.2%	Q2 2026	1.3% Q1 2026

Questions and answers

What is the inflation rate in Luxembourg?

Luxembourg's annual inflation rate was 4.9% in October 2026, down from 5.2% in September 2026.

What is the interest rate in Luxembourg?

The European Central Bank deposit facility rate is 2.50% (as of November 2026). The next rate decision is due on 17 December 2026.

How fast is Luxembourg's economy growing?

Luxembourg's real GDP grew 1.3% year on year in Q2 2026. The IMF's October 2026 World Economic Outlook forecasts growth of 1.1% in 2026 and 1.6% in 2027.

What is the unemployment rate in Luxembourg?

Luxembourg's unemployment rate was 7.3% in September 2026, unchanged from August 2026.

What is Luxembourg's 10-year government bond yield?

Luxembourg's 10-year government bond yield averaged 3.70% in September 2026.

How much government debt does Luxembourg have?

Luxembourg's government debt is about 26.0% of GDP (latest annual figure), with a budget deficit of 1.8% of GDP.

What is Luxembourg's credit rating?

Luxembourg's sovereign credit ratings: S&P AAA, Moody's Aaa, Fitch AAA.

What is the VAT rate in Luxembourg?

Luxembourg's standard VAT rate is 17% (2026 rules).

What is the corporate tax rate in Luxembourg?

Luxembourg's corporate income tax rate is 23.9% (2026 rules).

Who leads Luxembourg?

Luxembourg is led by Prime Minister Luc Frieden (CSV), heading a CSV–DP coalition; Grand Duke Guillaume (head of state since 3 October 2025). Next election: Next general election due in October 2028.

Outlook

The government's budget assumes growth of 1.2% in 2026 and 1.9% in 2027, close to the IMF's 1.1% and 1.6%, with recovery helped by tax cuts and steadier financial markets. The main downside risk is a global market correction that would hit fund assets, financial-sector profits and tax revenue, while a housing market still in decline (-2.2% y/y in Q2 2026) and unemployment above 7% on Eurostat's measure are domestic weak spots. Headline HICP inflation (5.2% in September) is inflated by fuel bought by non-residents, while the national CPI used for wage indexation was lower, at about 2.9%.

Why Luxembourg matters for the world economy

Luxembourg is the world's second-largest investment-fund centre after the United States, so fund flows, regulation and redemptions that pass through it matter for global bond and equity markets and for asset managers across Europe and Asia. It also hosts many cross-border banks, the euro-area headquarters of major tech and payments firms, a big Eurobond listing venue, the steelmaker ArcelorMittal and the satellite operator SES. Its own goods trade is tiny, but almost half of its workforce commutes from France, Belgium and Germany, so its labour market and wage indexation directly affect household income in those border regions.

Politics

The CSV–DP government of Luc Frieden, in office since late 2023, has a comfortable majority and its main debates are over tax relief, housing costs and pension reform. Finance Minister Gilles Roth's 2027 budget, presented on 7 October, cuts corporate income tax by one point, keeps wage indexation unchanged and projects a general-government deficit of about 0.6% of GDP, with debt near 29% of GDP, still among the lowest in the euro area. Political risk is low; the economy's sensitivity comes from the financial sector and a weak housing market.

System: Parliamentary constitutional monarchy (grand duchy).

Economy and taxes

GDP: US$101 billion
Population: 0.7 million
Government debt: 26.0% of GDP
Budget balance: −1.8% of GDP
Current account: 0.7% of GDP
Exports: 190.5% of GDP
Main exports: Financial services (investment funds, banking, insurance) dominate; goods exports are mainly steel products, tyres and rubber, plastics, machinery and glass
Top export markets: Germany (25.2%), France (15.5%), Belgium (14.2%), Netherlands (6.5%), Italy (4.2%)
IMF growth forecast: 1.1% in 2026, 1.6% in 2027
IMF inflation forecast: 3.0% in 2026, 2.6% in 2027
Currency: EUR
Freelancer tax: A self-employed person earning the average wage (EUR 83,760 a year) pays about 40.9% of it in income tax and social contributions (2026 rules)
Top income tax rate: 45.8%
Gold reserves: 2.2 tonnes (September 2026)
Energy self-sufficiency: 4% (2024)

Recent news

4 November 2026 Statec expects the next wage indexation in the second quarter of 2027 Paperjam
Statistics agency Statec forecasts inflation of 2.3% in 2026 and about 2.5% in 2027, roughly 0.7 points lower than without the extended energy aid, and expects the next automatic wage and pension indexation in the second quarter of 2027. It assumes Brent oil averages $96 a barrel next year.
4 November 2026 Luxembourg's inflation eases in October Trading Economics
Statec's national consumer price index rose 2.7% on the year in October, down from 2.9%, and fell 0.5% from September. Eurostat's flash estimate of the harmonised measure also eased, to 4.9% from 5.2%.
29 October 2026 Tripartite deal extends energy subsidies through 2027 and limits wage indexation Paperjam
The government and social partners agreed to keep subsidies on electricity (4 cents per kWh), gas and heating oil throughout 2027, at a cost of about €150m, while the 5-cent fuel discount ends in February. The government promised firms at most one indexation tranche a year in 2027 and 2028.
21 October 2026 Eurostat confirms Luxembourg's debt is among the EU's lowest Eurostat
Eurostat's autumn fiscal figures show Luxembourg moving from a 0.6% of GDP surplus in 2024 to a 1.8% deficit in 2025. Debt edged up to 26.0% of GDP, the second-lowest in the EU after Estonia and far below the euro-area average of 87.7%.
16 October 2026 Luxembourg inflation jumps to 5.2% on the harmonised measure Eurostat
Eurostat's final figures put Luxembourg's HICP inflation at 5.2% in September, up from 4.0% in August and well above the euro-area rate of 3.8%, reflecting the weight of fuel in the harmonised basket.
7 October 2026 Luxembourg's 2027 budget pairs corporate tax cuts with a small deficit Paperjam; Luxtoday
Finance Minister Gilles Roth presented a budget with a general-government deficit of about EUR 570m (0.6% of GDP), a one-point cut in corporate income tax and unchanged wage indexation, assuming growth of 1.2% in 2026 and 1.9% in 2027. Public debt is set to reach a record of about 29% of GDP, still very low by euro-area standards.

Headlines and summaries are compiled daily from the linked reports with AI assistance.