Year-End Deal

Public money alone will not be enough to make the investments the European economy needs. On that basis, there is broad agreement that the single market and the capital markets union should be developed further, with less red tape and a more business-friendly environment, according to Prime Minister Luc Frieden during Wednesday's meeting with European Council President Antonio Costa in Luxembourg.

If Europe wants to invest in innovation, artificial intelligence, and defence, public money will indeed be needed, Frieden said. Public money, however, is limited, and private capital will also have to play its part. On that basis, an agreement on the Savings and Investment Union should be reached by the end of the year. Luxembourg would have an important role to play here through its financial centre, Costa emphasised.

EU budget tensions

The EU's Multiannual Financial Framework for 2028-2034 remains contested. Member states are split between those on the more frugal side and those who want a larger EU budget. Costa set himself the ambitious goal of hammering out a compromise by the end of the year, securing robust funding for defence, security, competitiveness, research, and innovation.

Luxembourg finds itself in the thick of the debate. Investment is needed, Frieden said, but not on the back of new borrowing or fresh taxes. His remarks came against the backdrop of his firm rejection of the EU's proposed tobacco tax.