Yuriko Backes, finance minister, has said “the government obviously cannot do everything” to blunt the impact of rising cost of living. The comments came during the Luxembourg Financial Markets Association’s 65th anniversary reception, held at Mudam in Kirchberg, 13 September 2022. Photo: Guy Wolff/Maison Moderne

Yuriko Backes, finance minister, has said “the government obviously cannot do everything” to blunt the impact of rising cost of living. The comments came during the Luxembourg Financial Markets Association’s 65th anniversary reception, held at Mudam in Kirchberg, 13 September 2022. Photo: Guy Wolff/Maison Moderne

Ahead of the tripartite negotiations, the finance minister has stressed the need to preserve the Luxembourg business climate and a sound public balance sheet.

Addressing the Luxembourg Financial Markets Association, which was celebrating , finance minister (DP) touched on the energy crisis and overall economic sentiment. “The pandemic and the unjustified and unjustifiable war in Ukraine have.… disrupted global supply chains.... triggered an energy and cost of living crisis,” she said on 13 September.

Noting a “new environment” of work caused by “slowing economies” that “could go into recession as prices continue to soar”, the finance minister said that “the government has already taken up its responsibilities”. She cited “an energy package” and “a solidarity package that represents.… more than 1% of GDP”.

With winter approaching, Backes stressed the government’s desire to “give predictability to businesses” and “to help the most vulnerable who have experienced a great loss of purchasing power”.

The comments came just ahead the continuation of preparatory discussions for the next tripartite summit between representatives of employers and employees and the government.

The triple A issue

“Support measures are inevitable and necessary. And of course they will have a cost,” said Backes.

The cost seems to come at the worst possible time. “The fact that we have a tripartite negotiation, but at the same time we have to prepare the budget does not necessarily make things easier,” she observed, before adding: “The government obviously cannot do everything.”

She emphasised the need for some accountability: “It is part of my job description, I have to maintain a prudent fiscal policy.” The stumbling block remains the triple A rating granted to Luxembourg by credit rating agencies. The triple A rating depends in part on the health of the country’s public finances. “Our triple A rating and our economic stability are an integral part of our success, the success of our financial centre and our international business environment.”

In view of the delicate balance between providing the necessary public support and maintaining the business climate, the role of finance minister takes on a special significance, according to Backes. As she explained after the Ecofin meeting of EU finance ministers on 8 and 9 September, “I have learned from my counterparts that they think it is really one of the loneliest jobs in the world to be a finance minister at the moment.”

Originally published in French by and translated for Delano

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