Serge Allegrezza (STATEC): Figuring Out Luxembourg’s Financial Future
For Serge Allegrezza, the Director of STATEC (National Institute for Statistics and Economic Studies of the Grand Duchy of Luxembourg), planning for Luxembourg’s financial future is all about knowing the numbers.
What figure would you use to define Luxembourg?
There are two figures that summarise the peculiarity of Luxembourg. The first one is gross national income (GNI). In many countries, this is a similar figure to GDP, but in Luxembourg, GNI is around 30% lower. This is because GNI measures the income which stays inside the limits of the country, while Luxembourg has a lot of cross-border workers and foreign owners of capital, taking out money from the country (wages, profits, interests). My second number, which I often use at gatherings, is that around 27% of the workforce are resident Luxembourgers. All the other employees are cross-border workers or foreigners living in Luxembourg, so nationals are a minority in the labour force. Of those 27%, half of them are working for the public sector. This shows how open Luxembourg’s economy is but also how few nationals work in the private sector.
“Those assets are much larger than the public debt, so the net debt is in fact negative."
How do you see the country’s debt in relation to its size?
When we talk about debt of Luxembourg, normally we’re talking about public debt. It’s important to distinguish between gross public debt and the net public debt. Of course, Luxembourg has supported households and companies during the pandemic and now during the energy crisis, driven by the Russian war in Ukraine. Those events have weighed on public deficits which had to be financed by loans. Public debt is still low for now at 25% of GDP. It’s low and even negative if you take into account that the Luxembourg state has also assents (pension reserve fund, stakes in big companies, property). But in the future public debt will probably increase sharply due to higher expenses in pensions and health as well as investments in climate change, unless higher economic growth (productivity + labour force expansion) can counterbalance this trend.
What risks and opportunities do statistics show for the country?
One of the biggest risks right now is climate change, which will imply deep transformations in the way we live and work. But the biggest challenge will be to stay attractive and competitive, open and innovative. The benchmarks set up by the Observatory of competitiveness at the ministry of the economy shows that Luxembourg can still improve in many dimensions in order to attain excellence.