With nearly 25% of the gross value added produced, the financial sector is Luxembourg’s economic specialization. Therefore, any gain or loss in the competitiveness of the financial centre compared to its competitors potentially affects its economic prosperity. Luxembourg’s financial sector draws its resilience from diversification across different markets, which has strengthened over the past ten years, making it a multi-specialist and a leader in certain segments.
This study, a compilation of three analyses called “Décryptages”, provides an overview of the competitive position of the financial centre, both as a whole and in its main specializations. It describes a financial centre that is increasingly diversified in its activities, more dependent on the European continent and which has gained in importance within the EU. It owes these developments to a changing banking sector marked by the rise of corporate banking, the maintenance of a dominant position in investment funds despite strong Irish competition, the growth of non-life insurance following Brexit and the central role of the Luxembourg Stock Exchange in bond markets.
The financial centre’s good performance is partly due to its proactive approach to sustainable finance. While other financial centres have a larger pool of engineers, the Luxembourg financial centre must not miss out on the technological shift underway, where tech players are competing with financial firms. Its ability to maintain its leadership will also depend on regulatory developments in the European financial markets.
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