Contemporary history of Europe

Luxembourg Economy

Situated in the centre of Europe and bordered by two major powers, France and Germany, the Grand Duchy of Luxembourg has always sought to maintain an openness to its neighbours, for reasons of security and to give itself access to larger markets. In the 19th century Luxembourg was part of the German customs and trade union (Zollverein). Following the First World War, the country embarked on a process of economic and monetary integration with Belgium via the BLU and it played a driving role in the Benelux Economic Union. Following the Second World War, it was ultimately with the European project that these integration efforts began to bear fruit and assume a new dimension. If Luxembourg is to safeguard its welfare state and boost competitiveness, especially in view of the prevailing uncertainty of the current international and geopolitical climate, it must tackle several recurrent issues (including an ageing population, unemployment among young people, the sustainability of the social security system).

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