Luxembourg increases and extends financial aid for businesses
Luxembourg is to increase and extend support measures for businesses and is also due to introduce additional tax breaks as the economy continues to grapple with the economic fallout from the Covid-19 pandemic.
The Grand Duchy is extending a business subsidy which was set to end in June until the end of year and will increase the maximum potential funding available per company from €800,000 to €1.8 million, the Economy Ministry said on Tuesday, whilst the Finance Ministry has also proposed a new law in parliament extending tax breaks to help businesses.
The government had introduced the aid programme last year for companies that have suffered from a significant drop in revenues due to lockdown restrictions and the resulting economic downturn.
Luxembourg's parliament voted on Thursday to extend Covid-19 restrictions until 25 April, whilst allowing terraces in bars and restaurants to re-open from Wednesday.
The government programme of aid aims to support development projects, particularly those targeted at increasing innovation and energy efficiency and contributing to the circular economy.
€62 million already distributed
"This aid scheme encourages companies to make investments to improve their competitiveness and produce more sustainably, despite the investment climate currently deteriorated by the Covid-19 crisis", Economy Minister Franz Fayot said in a press release.
207 requests for aid of this type have already been granted by the government amounting to €62 million of assistance, Fayot said.
Finance Minister Pierre Gramegna has also introduced an extension of tax breaks to amend the budget for this year to help businesses weather the storm caused by the pandemic, with a particular focus on commercial rents as part of the package.
The country's recovery plan includes a measure introduced last year, aimed at encouraging landlords to reduce business rents by introducing a tax allowance per commercial lease contract, corresponding to twice the amount of the rent reduction, up to a maximum of €15,000.
"This measure is intended to improve the cash flow situation of tenants, especially those who have been affected by the ban on commercial and artisanal activities (...) such as in the retail or catering sector", the draft bill notes.
The news comes as Luxembourg re-opened terraces in bars and restaurants on Wednesday, under strict conditions which allow two people per table between 6am and 6pm.
Vaccinations picking up pace
As the vaccine roll-out in Europe and Luxembourg remains slow compared to the US and the UK, and as China has largely managed to keep the virus at bay, experts are warning that those countries vaccinating more slowly are in turn likely to experience a slower economic recovery.
Luxembourg's economy has not suffered nearly as much from the pandemic as other European countries, with the Grand Duchy's gross domestic product registering a decline of just 1.3% in 2020, according to the national statistics bureau Statec, compared to a 5% contraction in Germany and 8.3% in France.
The global economy will expand 6% this year, up from the 5.5% growth expected in January, the IMF said in its World Economic Outlook on Tuesday.
The pace of vaccination has picked up speed in Luxembourg and Europe over the last few weeks, with the European Commission saying that immunity for the 27-nation bloc's adult population could be expected by the end of June.
Luxembourg will start sending out new vaccine invitations this week covering the 55-64 age group, as well as pregnant women, and people suffering from diabetes, high blood pressure and obesity.