ECONOMY
Luxembourg is one
of the most prosperous countries in Western Europe. Two very different
industries – banking and steel – have historically been the mainstays
of the economy. The steel industry has ceased to be as dominant as
other industries, notably chemicals, rubber, plastics, metal products
and light manufacturing (textiles, paper, electronic equipment) have
prospered. The banking and finance sector is also in a healthy
condition: companies originally attracted to Luxembourg by favorable
banking secrecy laws and low taxation have prospered despite the
gradual harmonization of taxes and tariffs across the EU. There is also
a small but healthy agricultural sector mainly producing crops. During
2001 and 2002, the economy grew at around 5 per cent annually – twice
the average EU rate, with inflation of 3 per cent. The Luxembourgeois
economy has long been linked with that of Belgium, initially through
the 1921 economic union, supplemented by a further treaty in 1958 and
latterly, by mutual membership of the EU. Luxembourg was an inaugural
adopter of the Euro at the beginning of 1999. Belgium is the largest
single trading partner, followed by The Netherlands and France.
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