Why Finance Minister Gilles Roth Won’t Notice the €2.8bn Capital Deficit

Luxembourg’s budget balance deteriorated significantly in the first quarter of 2026. Despite rising revenue, the numbers tell a grim story. On Tuesday 21 April, Finance Minister Gilles Roth appeared before MPs to provide an overview of public finances as at 31 March. A few hours later, his ministry released a press release describing the trend in revenue as “generally positive.” Generally positive? Let us look closer. Central government revenue stood at €7.92 billion, up 4.5% year-on-year. Sounds fine. But the budget balance has fallen to €59 million – down from €337 million a year earlier and €401 million in 2024. Over two years, the deterioration is a decline of nearly €340 million. Gilles Roth, a €59 million surplus is not a victory. It is a warning. And you are ignoring it. Expenditure Rising Twice as Fast as Revenue The crux of the problem lies in a structural imbalance that Gilles Roth refuses to highlight. Expenditure is rising twice as fast as revenue – up 8.6% year-on-year to €7.86 billion. This budget gap alone accounts for the deterioration in the balance. But Gilles Roth’s press release calls it “positive momentum.” Positive momentum? Gilles Roth, when spending grows at double the rate [...]

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