The Ministry of Finance put central administration revenue at €29.1 thousand million at 31 December 2025, up 2.5% on the year, while expenditure rose 7.4% to €30.1 thousand million.
The swing marks a clear change of pace from 2024, when receipts surged and the balance remained positive. By the end of 2025, spending was again running ahead of income, with the ministry noting that the final balance will only be confirmed once the complementary period closes at the end of February 2026.
Choices, not shocks
Gilles Roth, finance minister, framed the deterioration as a deliberate policy choice rather than a fiscal accident. “Despite a less dynamic evolution of revenues in 2025 than in 2024, our public finances remain solid,” he said, pointing to Luxembourg’s low public debt and the recent confirmation of its triple-A credit rating.
Without the additional expenditure, the minister argued, the deficit would have been smaller, signalling that the gap reflects intentional counter-cyclical action rather than budgetary drift.
On the revenue side, the picture was mixed. Corporate income tax rose strongly, a performance the ministry attributed primarily to the financial sector, while receipts from more volatile sources such as capital income and wealth taxes fell back after an unusually strong 2024.
The overall slowdown in revenue growth was thus presented as a normalisation effect rather than a sign of weakening activity, following the exceptional surge recorded a year earlier.
Spending tilt
Spending increases were broader and more pronounced. Public investment climbed sharply, including higher outlays for affordable housing and military equipment, while expenditure on wages and transfers also rose, notably to social security and municipalities.
The ministry linked the expansion to a more uncertain geopolitical environment, using investment and security spending to justify the faster pace of outlays.
The resulting deficit is not presented by the ministry as a sign of fiscal stress, but as the cost of maintaining investment and cohesion in a more volatile context.
With the revenue surge of 2024 fading into a more normal rhythm, the government is asking to be judged less on short-term balances than on resilience and strategic capacity.
