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In Tuesday's State of the Nation address to Luxembourg's parliament, Prime Minister Jean-Claude Juncker said the prospects are bleak, yet Luxembourg is well-equipped to deal with economic issues due to stabilized state finances and a prudent budget policy supported by low debt.
Juncker acknowledged that people are worried about job security, but said the Grand Duchy is better prepared than its neighbors to face the crisis. He spoke of unmistakable progress in social policy where laws implemented in the last year, and recent initiatives in childcare and school reform, would strengthen cooperation in Luxembourg's social infrastructure.
The prime minister also mentioned advances in telecommunications and public transport, with the latter seeing a sustainable transport policy with a growth in rail passengers of 25 percent. Other areas to be modernized are the agriculture sector and a five-year plan for tourism, with plans afoot for a more efficient public service. He cited good relations with trade unions.
Juncker indicated an end to the reliance on the finance sector and growth in logistics, health and environmental management, and expects a growth of 25 percent in economic output during the next few years. He defended the government's rescue operations concerning almost 3 billion euros for the Fortis and Dexia banks, and criticized the conduct of the G20 summit in London where Luxembourg was put on the "grey list".
This year will be tough, Juncker said, but Luxembourg will come out of it stronger than before. He highlighted the 1.2 billion euro economic package providing tax relief, and hinted that salary indexation would return in 2010. Household and industry income would drop this year, and with it tax revenues too.
Finally, the prime minister thanked the collective merit and the policy of collective responsibility of the politicians from the coalition government and for their work since being elected at the last election.
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