Time to shift up a gear
“State of play on the crisis in Europe and in Luxembourg: expert views and opportunities” is the title of the 7th edition of the Economy Days at the Luxembourg Chamber of Commerce. The message was clear as day: Luxembourg is still perceived as attractive but must be careful not to lose ground.
Of the 230,000 foreigners living in Luxembourg, 86% are from the European Union. Luxembourg has 157,000 cross-borders commuters, which represent 40% of the workforce; this represents one out of every four cross-border workers in Europe. What is perceived as normal in Luxembourg is far from being the case in most parts of the European Union. Three out of every four companies’ managing directors are foreigners.
“That makes Luxembourg the laboratory of European integration”, Pierre Gramegna, Director General of the Chamber of Commerce, says in his welcome speech at the Economy Days, organised by the Ministry of the Economy and Foreign Trade, the Luxembourg Chamber of Commerce, the Business Federation Luxembourg FEDIL and PwC Luxembourg. Mr Gramegna deplores poor foreigner participation in the public debate; this is a huge democratic deficit that has to be changed.
He cites a couple of possibilities on how to reverse this trend: facilitating access to citizenship and giving the foreigners the right to vote, for instance. Pierre Gramegna concludes that Luxembourg has so far suffered less from the crisis than other countries because of the openness of its economy. “It is crucial that the country remains attractive for international investors; this is the golden rule and that attitude mustn’t change. In addition to this, our economic environment and our fiscal and legal frameworks must remain stable and even improve”.
Carol Thelen, Chief Economist at the Luxembourg Chamber of Commerce notes that a small open economy has to promote its assets; that is why more financial means need to be released for promotion and marketing campaigns, especially in times of crisis when every country is repositioning itself.
Jeannot Krecké, former Minister of the Economy and Foreign Trade and moderator of a roundtable, cited some significant trends and events such as the digital revolution, the expansion of the European Union, and the banking crisis followed by the sovereign debt crisis. Mr Krecké has the impression that Luxembourg hasn’t adapted properly to these dramatic changes.
Romain Bausch, CEO of the satellite company SES, agrees but nuances that “although Luxembourg has missed the boat in the past, it is still in time to pick up and profit from the opportunities ahead”. At the same time, he admits that Europe has lost in attractiveness and that the music plays somewhere else; mainly in emerging markets where SES has been growing with double-digit figures over the last few years. He is convinced that the economic landscape will look completely different and doubts that Luxembourg will remain in a good position.
Michèle Detaille is slightly more optimistic when speaking about the future of the Luxembourg economy. The Managing Director of the Luxembourg-based company No-Nail Boxes underlines that local civil servants are more pragmatic than in neighbouring countries and that one shouldn’t only talk about the problems but also about assets and opportunities. “I am optimistic that the country will get its act together if it has to. Our people have one big advantage: they have their feet on the ground”.
Charles-Louis Ackermann is CEO of Accumalux Group, a single-source supplier for all plastic component needs of the automotive, industrial and motive power battery industries. In order to remain competitive, he suggests that Luxembourg should gain inspiration from countries like the Czech Republic when it comes to granting permissions and Bulgaria when talking about an attractive fiscal framework. “In Bulgaria, there is a flat tax of 10% applicable to companies and households. If Luxembourg were to raise taxes, it would attract neither investors nor qualified staff”.
René Winkin is an energy expert and Secretary General of the Business Federation Luxembourg (FEDIL). He is concerned about the European energy policy and the fact that Europe is about to lose more industrial sites. He highlights his worries with a telling example: “The idea of CO2 emissions trading was counterproductive. It is a little surreal to see that in Europe we pay companies a premium via certificates to manufacture outside of Europe”.
One of the roles of the Post and Telecommunication Company is to make companies’ lives easier. Claude Strasser, CEO of P&T Luxembourg, underlines during the roundtable that, “though little-known to the public, the government has heavily invested in state of the art infrastructure such as data centres and fibre optic lines”. This farsighted investment has already started bearing fruit with companies from the gaming industry settling down in Luxembourg.
Boris Pfeiffer, Managing Director of Kabam Europe, admits that the attractive VAT was one of the reasons why they moved their offices to the Grand Duchy. But he also stresses that the technological infrastructure offered was another argument to come here. He thinks it is important that in the gaming sector, like in others, clusters will be created in order to attract qualified personnel from abroad. “We mainly hire very young people who generally care more about a diverse nightlife than about Luxembourg’s quality of life. They love to come when they know that in their industry there are several competitors based in Luxembourg”.
All panellists, including the moderator, have strong views on the future of Luxembourg and Europe, but they more or less agreed on the same things. Luxembourg can throw into the ring arguments like solid IT-infrastructures, stability and a multilingual environment to attract investors and qualified staff. On the other hand, there are still challenges to be mastered in areas like education, transport and housing. CW