Luxembourg’s economic environment remains difficult despite some signs of optimism for the coming months, according to the latest Luxembourg Economy Barometer of the Luxembourg Chamber of Commerce. Furthermore, companies expect concrete measures to simplify administrative procedures and improve their profitability.
The 13th Economic Barometer comes in an optimistic context driven by lower interest rates, despite an erosion of confidence in the medium term due to the uncertain geopolitical environment and still subdued demand.
More difficult activity than expected
Among the main findings of the survey with some 580 Luxembourg companies, are the fact that Luxembourg companies have experienced more difficult activity than expected over the past six months. “Only 16% of companies have seen growth in their activity, 55% have seen their activity stabilise and 29% have recorded a decrease,” the Barometer shows.
The transport, trade and hospitality (HORECA) sectors have particularly suffered, with respectively 39%, 36% and 34% of companies which faced an activity drop in activity. The financial services sector held up better, with 32% of companies recording growth. Meanwhile, industry saw a slight improvement thanks to a drop in inflation and interest rates.
When asked about investment priorities, 39% of companies intend to focus on renewing equipment, and 31% on modernising facilities. However, investment prospects in the fields of the environment and artificial intelligence are still limited, the Barometer added.
As for access to credit, 73% of the companies surveyed believe that they have not encountered any difficulties. The other 27% say they encountered obstacles, more particularly those active in the hospitality, transport and construction sectors. Small businesses remain the most affected.
“Simplifying to do better business”
This edition of the Barometer devotes its thematic focus to administrative simplification. According to the document, 35% of companies believe that procedures have become more complex, especially in financial services.
Document redundancy, dispersed information and a multiplicity of platforms are among the main administrative burdens cited. These problems particularly affect the industrial, HORECA and energy sectors.
“Administrative procedures represent a heavy and often underestimated burden. Only 23% of companies have evaluated the cost or time of these steps, revealing considerable charges: up to €50,000 per month in financial services or more than 40 hours per month in some sectors,” the Barometer reports. Thus, 71% of managers believe that these approaches weigh on the profitability of their company, and 38% say that it is difficult to manage.
“Administrative simplification should not be an abstract goal, but a tangible reality for every company,” concludes Carlo Thelen, CEO and Chief Economist of the Chamber of Commerce. “Well thought out and co-constructed with economic players, it will reduce costs, strengthen competitiveness and consolidate Luxembourg’s attractiveness. This is an essential condition for building a more agile, resilient and forward-looking economy.”
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