LuxembourgLuxembourg citizens would need 76 years of full income to pay off their share of national debt, longer than anywhere else globally, according to new research from trading firm Taurex. The finding reflects Luxembourg’s unique position as a major financial center where external debt calculations include corporate obligations from thousands of multinational companies using the country as a financial hub.
Luxembourg’s external debt reached approximately 3.93 trillion dollars by late 2024, representing more than 4,400% of the country’s gross domestic product. When divided among Luxembourg’s 680,500 residents, this creates a theoretical per capita debt burden of roughly 6.95 million dollars. Even with Luxembourg’s high average annual income of 91,500 dollars, the highest in Europe, residents would theoretically need more than seven decades to clear this amount.
The calculation, while mathematically accurate, requires important context. Luxembourg’s exceptionally high external debt ratio stems from its role as a global financial center hosting thousands of foreign controlled companies, including large multinational enterprises, that use Luxembourg as a financial platform to manage business activities and structure corporate investments. This corporate debt gets counted as external debt even though individual citizens bear no direct responsibility for repaying it.
The study examined how long citizens across different countries would theoretically need to work, using their full income, to pay their per capita share of national external debt. Nine of the ten countries requiring the most years are European, with only Singapore breaking into the top rankings.
Ireland required eight years for average residents to cover their 621,000 dollar share of the country’s 3.3 trillion dollar external debt against annual earnings of nearly 77,900 dollars. The Netherlands followed at 4.1 years, with Dutch residents owing around 260,000 dollars from the country’s 4.78 trillion dollar external debt while earning 62,800 dollars yearly.
Singapore ranked fourth at 3.9 years. The city state owes 1.71 trillion dollars externally, working out to approximately 292,000 dollars per person against average earnings of 74,800 dollars annually.
The United Kingdom came fifth despite having Europe’s largest total external debt at 9.59 trillion dollars. This translates to about 138,000 dollars per person, requiring roughly 2.8 years to cover against average British annual income of 48,600 dollars.
Switzerland, with the highest income among ranked nations at 95,900 dollars yearly, still required 2.6 years as each person’s share of the country’s 2.2 trillion dollar debt amounts to around 245,000 dollars.
Greece took seventh position at 2.4 years. While Greece’s 550 billion dollar total external debt ranks smallest among the top ten countries, its relatively low average income of 23,000 dollars stretches repayment time. Greek residents face individual debt portions of 55,000 dollars.
France held eighth position with citizens needing 2.3 years to cover their share. France’s 6.99 trillion dollar external debt, second largest in total among the top ten, creates individual shares of 105,000 dollars against annual earnings of 45,200 dollars.
Finland ranked ninth, where the country’s 660 billion dollar external debt divided among 5.6 million citizens creates a 2.3 year repayment timeline. Each Finnish resident would owe 117,000 dollars while earning 52,000 dollars annually.
Belgium completed the top ten at 2.2 years. The country’s 1.45 trillion dollar external debt translates to 123,000 dollars per person among 11.8 million citizens against average yearly income of 54,800 dollars.
Nick Cooke, chief executive of Taurex, noted that the financial system now operates on permanent debt rather than balanced budgets. Advanced economies no longer plan to fully repay what they borrow, instead refinancing old debts with new ones. This system functions until investors lose confidence, potentially forcing even wealthy countries to suddenly address massive accumulated obligations.
The research highlights a broader trend: global external debt has climbed to approximately 97 trillion dollars, representing a 67% increase over the past decade. This includes both public and private debt owed to foreign creditors, payable in internationally accepted currencies, goods, or services.
For Luxembourg specifically, the eye catching 76 year figure masks the reality that much of this debt belongs to corporations rather than the government or individual citizens. Luxembourg’s actual national government debt stood at 24.3 billion dollars as of September 2024, representing just 26.6% of nominal GDP, among the lowest government debt ratios in Europe.
The distinction between external debt, which includes all obligations to foreign creditors including private sector borrowing, and government debt, which reflects only public sector obligations, proves crucial for understanding Luxembourg’s position. The country’s financial sector generates substantial external debt through normal banking and investment activities without necessarily indicating economic distress.
Whether this debt structure creates vulnerabilities depends partly on the nature of the obligations and the stability of the financial institutions carrying them. Luxembourg’s strong regulatory framework and high per capita wealth provide buffers, though the concentration of financial activity does create exposure to global market disruptions.
The research methodology dividing total debt by population offers a thought experiment about theoretical burden sharing but doesn’t reflect how debt actually functions in modern economies. Governments refinance continuously, and corporate debt gets serviced from business revenues rather than citizen incomes.
Still, the rankings reveal genuine differences in how countries manage external obligations. Nations with large external debts relative to income face greater vulnerability to shifts in global lending conditions, currency fluctuations, and investor confidence, even when individual citizens never directly repay these amounts.