Optimism in the business community has clearly waned. Companies say they lack the stability required to invest and create jobs. While around 90% of firms expressed confidence in the country’s economic prospects back in 2020, that share has dropped to just 67% in 2025.
For Carlo Thelen, director of the Chamber of Commerce, restoring trust is essential. He stressed that Luxembourg’s generous social model can only be financed if the economy is allowed to generate sufficient prosperity first.
He pointed out that this requires a predictable environment with fewer bureaucratic hurdles and manageable costs. According to Thelen, production costs in Luxembourg have risen sharply in recent years, particularly labour costs.
He said that the automatic indexation mechanism and the recent increase in social contributions have added further pressure, and companies are unsure whether they can still maintain a feasible profit margin, which he described as vital.
Thelen noted that the government coalition between the Christian Social People’s Party (CSV) and the Democratic Party (DP) had taken office two years ago promising a more business-friendly framework, but insisted that more ambitious and decisive measures are still needed, especially to boost productivity.
He argued that Luxembourg has seen no productivity gains in a decade and must move much faster on digitalisation, artificial intelligence, research, innovation, and professional training. The same applies to administrative simplification: despite efforts, the pace remains too slow, he said.
In construction and housing too, the measures taken so far are not filtering through quickly enough. Companies, he warned, are facing excessive constraints, and the country risks losing attractiveness as a business location.
For Thelen, sharply rising labour costs remain a major concern. He added that, with businesses already under pressure, significantly raising the minimum wage now would send the wrong signal, given that Luxembourg already has one of the highest rates in Europe and indexes it regularly.
During the press conference, the Chamber of Commerce emphasised that Luxembourg’s economic environment has changed dramatically since 2020 due to successive global shocks affecting both competitiveness and profitability.
Thelen underlined that businesses need stability, predictability, and adequate demand, yet demand is currently weak across Europe, which directly affects Luxembourg’s export-dependent companies.
The risks facing Luxembourg’s economy in 2026 will come largely from abroad: geopolitical volatility, high prices for raw materials, and potential turbulence on financial markets. Meanwhile, many sectors are already struggling to find staff. Since 2024, the number of cross-border workers commuting to Luxembourg has even begun to decline.
Christel Chatelain, director of Economic Affairs at the Chamber of Commerce, warned that recruiting new workers will become increasingly difficult, with the housing crisis putting additional pressure on companies trying to attract talent.
Despite these challenges, Thelen acknowledged that there are also positive developments. The IT and AI sectors, along with start-ups and the growing space industry, have created promising pockets of dynamism. Luxembourg can showcase these strengths abroad, he said, where trade missions remain an important tool for forging new partnerships.
