The Economist’s Intelligence Unit (EIU) has published a report on 5 April which outlines the EU member states’ positions (soft, hard, or hard-core) on the negotiations for Brexit.
The EIU has put Luxembourg in the “hard” Brexit category, along with countries such as Croatia, Finland, Greece, Hungary, Italy, Portugal, Spain, the Czech Republic, Malta, the Netherlands and Slovenia.
However, the EIU has also delved deeper in the issues that will become important in these negotiations, such as the Brexit bill, cherry picking, economic and defence ties.
In “first round” issues, such as a low exit bill, Luxembourg was ranked in favour. Conversely, when it came to cherry-picking the four EU freedoms (free movement of goods, capital, services and people) the EIU reckons that the:
“founding members of the European project--Belgium, France, Italy, Luxembourg, the Netherlands and Germany--will take a hard line here, having consistently said that there will be no "cherry picking" from the four freedoms.”
“There is a high risk that the talks will break down on this point. Placing restrictions on EU migration is a politically important objective for the UK in the negotiations, and should be more straightforward to achieve now that the country has decided to leave the single market. However, the EU27's argument is that opting back in, even to certain areas of the single market under a new trade arrangement, should prevent the UK imposing limits on immigration. Member states with substantial trade and investment ties to the UK, and which have the most to lose from a disorderly Brexit, have an incentive to take a softer position on this point and find an acceptable compromise.”
Economic and defence ties
The EIU notes that the UK is the fourth-largest export market for Belgium, Sweden, Portugal, Luxembourg, Italy and the Czech Republic, accounting for 5‑9% of total exports in each country. Luxembourg is considered “soft” on this issue:
“These countries may therefore be supportive voices for the UK in the negotiations. Significant foreign direct investment in the UK or close links to its banking sector may also provide an incentive for Cyprus, France, Belgium, the Netherlands, Germany, Finland, Greece and Spain to take a softer line on the most contentious issues, although for the founding members, protecting the interests of the EU is likely to be the priority. For Germany in particular, protecting the future cohesion and stability of the EU will trump a softly-softly approach on trade or other issues.”
Luxembourg is in the big group of wanting to sustain defence ties with the UK after Brexit.
Ultimate red line: EU cohesion
“For almost all member states, a low-cost Brexit and compromises on the four freedoms represent red lines in the negotiations. But for the countries keen to preserve EU-UK ties in trade, investment and defence co-operation, these red lines are slightly blurred, in the sense that they may be willing to support the UK's push for a Brexit bill towards the lower end of the range of estimates, and may be amenable to finding a compromise on the single market-no free movement trade-off. There is therefore the potential for internal discord among the EU27, weakening the bloc's negotiating hand."
However, the EIU considers that the UK's political capital is short in the EU, and that many national governments would not live down well a clearly pro-UK position. It considers it unlikely that even Britain's traditional allies will risk undermining cohesion in the EU, as it could even favour euroscepticism in their own country.
You can find the charts of member state positions and more details here.