Press Release, Luxembourg, 02 April 2025

Navigating uncertainty in a changing world

The last few years have seen an increase in uncertainty across the globe, driven by geopolitical conflict, inflation, and macroeconomic unpredictability. In early 2023, the world was still emerging from the COVID-19 pandemic, facing rampant inflation and the repercussions of the Russia-Ukraine war. Although rapid interest rate hikes in advanced economies have tempered inflation, growth remains unpredictable. The re-election of Donald Trump introduces potential tariffs and costs for European businesses, while trade tensions with China threaten key sectors like automotive and manufacturing. Ongoing conflict in the Middle East adds to the uncertainty. Additionally, climate change has continued its advance, with 2024 marking the first time the average global temperature surpassed 1.5°C above pre-industrial levels, a benchmark in the Paris Agreement.

Luxembourg CEOs recognise the need to adapt to this changing world to ensure the long-term viability of their companies, with only 38% of Luxembourg CEOs believing their companies will remain viable for the next decade, compared to 55% of global CEOs. This represents a sharp decline from two years ago, when 51% of Luxembourg CEOs expressed confidence in their long-term business viability. This shift highlights the increasing pressures and uncertainties facing business leaders in the Grand Duchy.

Key findings from the survey

The report highlights several key takeaways:

• Innovation and excellence in Luxembourg: Despite concerns about obsolescence, Luxembourg’s local subsidiaries have the potential to drive innovation for their parent companies.
• Business conditions have improved: Challenges related to working with regulators and public-private sector collaboration have eased, reflecting Luxembourg’s commitment to fostering a business-friendly environment.
• Reinvention is essential: Luxembourg CEOs understand that transformation is necessary to remain competitive amidst global headwinds.
• Climate investments need a boost: While ESG considerations are integrated into executive compensation, Luxembourg firms lag behind global counterparts in climate-friendly investments.
• Global trends shape local business: CEOs in Luxembourg identify economic, demographic, technological, and geopolitical trends as more significant threats than policy-related issues.
• AI deployment plans are more advanced: Compared to global peers, Luxembourg CEOs have clearer strategies for integrating AI into their businesses, but there might be a gap between ambitions and the full-scale delivery of these technologies.

Business leaders adapt to workforce challenges

One of the most pressing concerns for Luxembourg CEOs is the availability of workers with key skills. More than a third of local business leaders identify this as a major threat, a significantly higher percentage than the 23% global average. Despite these concerns, Luxembourg companies remain competitive in attracting talent, with an anticipated workforce expansion of 3.9% in the next year, surpassing the global average of 3.7%.

The role of AI in business transformation

AI has emerged as a key driver of growth and innovation for Luxembourg’s financial sector. The survey reveals that 50% of financial services CEOs in Luxembourg expect AI to increase profitability by at least 5% in the next year. Moreover, 55% of Luxembourg CEOs have concrete plans to integrate AI into their technology platforms over the next three years. While enthusiasm for AI is soaring, its full potential remains largely untapped, as businesses are still in the early stages of execution and must overcome key challenges to turn ambition into reality.

Exploring the potential of sustainable finance

Despite Luxembourg’s reputation as a global leader in sustainable finance, the survey findings indicate that local firms have been slower to make climate-friendly investments compared to their global counterparts. Only 76% of Luxembourg companies have initiated climate-related investments in the past five years, one of the lowest rates globally.

However, with the introduction of new government incentives, including an 18% investment tax credit for digital transformation and green projects, Luxembourg businesses are expected to accelerate their sustainability efforts. CEOs also acknowledge the role of EU regulations, such as the upcoming AI Act, in providing a stable framework for integrating new technologies while ensuring compliance with sustainability goals.

François Mousel, Managing Partner of PwC Luxembourg, said:

“At a time when the European economy is poised to experience a period of potentially protracted sluggish growth, Luxembourg – with its internationally renowned financial centre and its strong and robust industrial heritage – can distinguish itself and become a bright mark for prosperity, technological innovation and climate adaptation and resilience. It is up to you, the CEOs of our Grand Duchy, to seize the opportunities at hand and guide the way forward.”  

A call for strategic reinvention

As Luxembourg’s CEOs navigate a rapidly changing economic landscape, the need for reinvention is crucial. PwC’s CEO Survey Report 2025 highlights the significant challenges and uncertainties facing Luxembourg’s business leaders. The findings show that Luxembourg CEOs are increasingly aware of the necessity for business reinvention, addressing both global economic unpredictability and specific local challenges.

Companies in Luxembourg are well-positioned to advocate for transformation and create value through innovative delivery models and business solutions, such as digital managed services, project management, marketing, human resources, data storage, and anti-financial crime operations.

Cécile Liégeois, Clients & Markets Leader of PwC Luxembourg, said:

“The survey highlights how Luxembourg CEOs acknowledge mixed results in climate finance but very positive results on AI, key areas that are necessary for any long-term transformation and adaptation. It is imperative that they intensify their efforts in these fields by taking a more hands-on approach to their firms’ climate investments. While strides have been made, these technologies and practices need to be embraced comprehensively to ensure businesses are positioned to navigate an uncertain future. Expanding into new client sectors, reimagining customer engagement, and prioritising investments in business reinvention will be essential steps in the coming years.”

For more insight and details visit the PwC CEO Survey Report 2025 – Luxembourg Edition webpage  and download the survey.