public finance

At the end of 2025, Lithuania’s Parliament adopted amendments to the unemployment insurance system intended to strengthen incentives for a faster return to the labor market. However, according to the LFM, the fundamental problem remains unresolved: for the fourth consecutive year, Lithuania records the highest unemployment trap rate in the European Union, and remains the only EU country where this indicator exceeds 100 percent.

The year 2025 was decisive for Lithuania – not only geopolitically, but economically. Defence spending increased significantly, while tax and pension reforms reshaped the policy landscape. Yet beneath these headline decisions lies a deeper question, one that extends far beyond Lithuania: are we strengthening the foundations of long-term prosperity, or shifting responsibility ever further towards the state?

2025 became another year of war, resilience, and adaptation for Ukraine. Russia\'s full-scale war against Ukraine continued and resulted in territorial losses, destruction of energy facilities, and other critical infrastructure, including railways and seaports. Therefore, according to IER estimates, real GDP grew by approximately 2%.

Who should be taxed, how should they be taxed and what purpose should it serve? These questions are as old as the world. To help answer them, in his 1776 work \"The Wealth of Nations\" the Scottish economist and philosopher Adam Smith formulated four principles of taxation. According to him, taxes should be proportional to the benefits that a person derives from belonging to society.