CEO Survey Report 2025 - Luxembourg Edition

The last few years have seen an increase in uncertainty, both about the future and the present, taking hold across the world. Geopolitical conflict and polarisation have become the norm while macroeconomic trends have become more difficult to predict. In early 2023, when the last edition of this survey was published, the world was still emerging from the COVID-19 pandemic. Inflation was rampant across the world, reaching levels not seen since the 1970s, while the Russia-Ukraine war had begun less than a year prior, causing all sorts of macroeconomic shocks.

While a series of rapid interest rate hikes across advanced economies brought down inflation close to central banks’ targets, growth has tempered and the next five or ten years remain just as unpredictable. Donald Trump’s re-election to the White House threatens increased tariffs and costs on European businesses. Trade tensions with China could upend key sectors of the European economy, particularly in the automotive and manufacturing sectors. Meanwhile, climate change has continued its relentless advance, with climate disasters becoming more frequent. 2024 marked the first time the average global temperature surpassed 1.5°C above pre-industrial levels, a key benchmark outlined in the Paris Agreement to mitigate the effects of climate change.

Luxembourg CEOs recognise they must adapt to a changing world in order to maintain the viability of their companies. In this 28th edition of PwC’s CEO survey, Luxembourg CEOs have expressed considerably more concern over their companies’ economic viability over the long-term, especially when compared to global respondents. Two years ago, at the time of the last CEO survey, 51% of Luxembourg CEOs, a slim majority, believed their companies would remain viable for the next ten years compared to 59% of global CEOs. In this edition, only 38% of Luxembourg CEOs say the same, compared to 55% of global CEOs.

Key messages

Despite concerns about obsolescence, local subsidiaries in Luxembourg can drive innovation and excellence for parent companies.
Business conditions in Luxembourg have improved significantly in the last two years, especially when it comes to challenges related to interacting with the public sector.
Luxembourg CEOs understand they need to reinvent themselves in the face of macroeconomic and global headwinds.
There is room for improvement when it comes to climate investments, and government incentives are expected to help bridge the gap.
The main threats that Luxembourg CEOs perceive, do not come from policy issues but rather from global economic, demographic, technological and geopolitical trends.
The Grand Duchy’s CEOs are hesitating to target new customers, but are progressing in offering new pricing models and finding new routes to market.
Over the next year, CEOs are projecting an expansion in their workforce.
Compared to global peers, Luxembourg CEOs have clearer plans for AI deployment. However, there might be a gap between ambitions and the full-scale delivery of these technologies.

Section 1 CEOs' outlook on key challenges

Luxembourg and its CEOs will face several challenges in the years to come. The respondents to this survey are well-aware of this, and this reality is reinforcing their general view that companies in Luxembourg will need to adapt to stay viable in the next decade and beyond.

Luxembourg CEOs view the ‘lower availability of workers with key skills’ as the biggest global threat they face; 36% of them highlighted this as a challenge compared to just 23% of global CEOs. Generally, Luxembourg CEOs view themselves as highly exposed to risk, reporting a higher exposure to every risk category in the survey than the global average except for two – climate change and social inequality.

Business conditions in Luxembourg have improved

None of the countries surrounding Luxembourg consider worker availability to be their most pressing challenge. Indeed, Luxembourg is even an outlier among countries that consider worker availability a top concern; most countries that share this view either have net migration outflows or have a rapidly ageing population with little immigration, such as Japan. This is why territories in southern and eastern Europe share Luxembourg’s concern. Luxembourg, however, has a unique demographic structure, with nearly half of its population being non-nationals and a notable portion of its workforce composed of cross-border commuters and expatriates. Globally, macroeconomic volatility and inflation remain highly pressing issues, with many emerging economies, especially in Africa, highly concerned with inflation.

Top risk according to CEOs by territory

^{Note: In some countries, two answers were tied as the top risk:

China (Mainland): Macroeconomic volatility & Inflation. Greece: Macroeconomic volatility & Lower availability of workers. Indonesia: Macroeconomic volatility & Geopolitical conflict. Mozambique: Inflation & Geopolitical conflict. The Philippines: Technological disruption & Lower availability of workers. South Africa: Inflation & Lower availability of workers. South Korea: Macroeconomic volatility & Geopolitical conflict. Thailand: Macroeconomic volatility & Cyber risks.}

^{Source: PwC 28th Annual Global CEO Survey; PwC Global AWM & ESG Research Centre}

When asked about specific challenges they faced in Luxembourg, CEOs responded that every operational headwind had eased since 2023. This makes sense given that some of the more worrying trends that took place in 2023, like inflation and rising interest rates, now appear to have stabilised. Major business hurdles, such as ‘decreasing revenues’, are viewed as challenges by a significantly smaller portion of CEOs in 2025 than in 2023. Additionally, challenges involving public-private coordination in Luxembourg have been alleviated significantly since 2023 –the ‘working with regulators’ and ‘regulatory compliance’ challenges have notably improved.

This underscores the Luxembourgish government’s efforts to improve business competitiveness, especially throughout 2024, and the advantages of Luxembourg’s distinctive public sector whereby regulators and government officials are relatively accessible and eager to engage in continuous dialogue with all stakeholders in the economy.

Section 2 How Luxembourg CEOs are reorienting their business

In response to the challenges they are facing, Luxembourg CEOs are taking strategic steps to reorient their business models towards more sustainable and more long-term modes of operation. However, in some cases, the transformations being carried out in Luxembourg are lagging with respect to the global average. Given that a near-majority (48%) of Luxembourg CEO respondents oversee country subsidiaries of parent companies, it is likely that many decisions on resource allocation and pursuing new business lines are taken at group level rather than locally.

The unique structure, however, does not limit Luxembourg companies' ability to influence change—it actually positions Grand Duchy CEOs to be catalysts for transformation within their organisations. In fact, by focusing on developing innovative delivery models, Luxembourg can rise to prominence as a centre of excellence in the FS sector, where local operations align with global strategies, contributing meaningfully to the whole group.

A local branch has the potential to evolve into a centre of excellence by strategically focusing on specialised services and implementing delivery models that enhance operational efficiency. This approach is helpful for companies in the Grand Duchy as it strengthens the branch's ability to meet clients' specific needs and positions it as an essential engine of the organisation's global success. Therefore, a subsidiary can become an indispensable hub within the broader global operations, ultimately contributing to long-term competitiveness and growth.

Limited action despite major challenges

Even though 35% of Luxembourg CEOs believe their companies will be obsolete within five years under their current business model, and another 21% believe they will be obsolete within 6-10 years, Luxembourg companies’ expansion into new business sectors is below the global average, where these sentiments on viability are not as strong. In fact, only 29% of Luxembourg companies have expanded into new sectors/industries in the last five years, considerably less than the global average of 38%.

When it comes to reinventing business models in FS companies, 38% of global respondents have focused on developing innovative products and services and 34% on targeting new customer bases. Meanwhile, only 13% of Luxembourg FS CEOs declared that their companies have targeted a new customer base in the last five years, falling behind the global trend. Nonetheless, FS companies in Luxembourg have taken important actions towards the execution of other strategies, such as the implementation of new pricing models, showcasing a commitment to remain competitive in such a fast-changing market.

There are certain areas where Luxembourg CEOs are proactively expanding their businesses. For instance, local CEOs will increase headcount by 3.9% over the next year, slightly above the global 3.7% average, and 12% of Luxembourg CEOs plan on increasing headcount significantly. Overall, this means that Luxembourg CEOs recognise that their businesses have the possibility to expand operations. It also means that CEOs are acting on this to some degree. By contrast, neighbouring Germany is the country in the PwC survey that will see the largest reduction in its workforce in 2025 (-2.5%). This situation speaks to Luxembourg companies’ high profitability and continued ability to attract workers, something that many other EU countries are currently struggling with.

^{Note: The percentage may not add up to 100% due to rounding. - Source: PwC 28th Annual Global CEO Survey; PwC Global AWM & ESG Research Centre}

Luxembourg CEOs are making purposeful efforts to adapt to changing business dynamics, focusing on reallocating resources and expanding their workforce. These actions reflect a commitment to strengthening internal operations and building resilience. Still, a cautious approach to diversification and innovation raises concerns about long-term viability, especially as many business leaders anticipate significant risks to their current business models in the coming years. However, despite the challenges Luxembourg companies face when compared to their global peers in areas like customer acquisition and entering new markets, their efforts to refine pricing models and explore new routes to market highlight areas of progress and potential.

Section 3 Luxembourg CEOs optimistic about AI

As a financial services hub, Luxembourg has much to gain from AI adoption. The technology can be harnessed to create bespoke, personalised asset management solutions, just to name one example. Embracing this revolutionary technology through the strategic deployment of AI solutions may allow financial centres to set themselves apart from rival fund domiciles. Luxembourg CEOs have the potential to further harness AI in order to carry out the business transformations necessary to overcome the polycrisis at play in the global financial system. Indeed, AI has had astonishing success in Luxembourg, with local CEOs showing great excitement over the technology. 50% of FS CEOs in Luxembourg believe AI will increase their profitability by 5% or more in the next 12 months. 10% believe it will increase profitability between 16% and 25%.

Compared to global peers, Luxembourg CEOs have a more concrete idea of how they want AI to transform their business. In most global financial centres, only a minority (on average) of CEOs are willing to implement AI into any given aspect of their business, while 55% of Luxembourg CEOs have concrete plans to integrate AI into their technology platforms in the next three years, and 48% plan to do so for their business processes and workflows. However, while the findings of the CEO survey reflect the current state of market sentiment, we believe the implementation of such technologies is still in the early stages—and despite a strong risk appetite, there is still a gap between ambition and execution.

Thanks to new EU regulations, such as the upcoming AI act, Luxembourg CEOs have a legislative framework in which they can safely integrate AI without fear of future legal repercussions. Luxembourg is taking advantage of the roadmap set out by the EU and its agility as a small nation as well as its highly developed financial centre to pioneer AI deployment in business, which is why Luxembourg CEOs seem to place greater confidence in AI than the global average.

Section 4 Unlocking the full potential of sustainable finance

With a significant portion of responding CEOs representing the financial sector—where the topic of sustainability remains at the forefront of discussions—Luxembourg CEOs appear to be underperforming in terms of their adoption of sustainable policies and investments. As a leading hub for sustainable finance, firms in the Grand Duchy are seemingly not reaping the benefits of sustainable investments to the same degree that firms in other territories are.

However, it is by no means the case that Luxembourg firms do not take action on sustainability, as many Luxembourg firms have incorporated sustainability considerations into their decision-making processes. Indeed, over half (58%) of Luxembourg CEO respondents receive at least some percentage of their compensation package based on sustainability metrics, more than the global average of 52% and the EU average of 53%. Furthermore, a quarter of Luxembourg CEOs receive 11% or more of their compensation (both overall and variable) from sustainability metrics. There are only five countries in the EU – Portugal, Spain, Poland, the Netherlands, and Finland – where a larger share of CEOs’ compensation is impacted by sustainability.

Despite ESG-friendly executive compensation programmes, Luxembourg companies have initiated climate-friendly investments less often than their global peers; only 76% of Luxembourg companies made these investments in the last five years, close to the survey’s global minimum of 74%. The same goes for investments made in 2024. On average, 81% of global CEOs’ firms made climate-friendly investments in the last 12 months compared to just 72% in Luxembourg. These findings serve as a call to action, urging firms to seize opportunities to prioritise sustainability and secure a resilient and prosperous future in the face of ongoing uncertainty.

Government incentives can also help in this area. Compared to other territories, Luxembourg CEOs feel they have received relatively little increase in government incentives for climate investments. Luxembourg CEOs believe government support for climate investments has increased by just 1.9% over the last five years, below both the global average (2.4%) and the EU average (3.0%). However, recent policy developments have attempted to address this gap. Notably, the Luxembourg government introduced an 18% investment tax credit for digital transformation and green transition projects, effective from January 2024. As the effects of this policy materialise, it is expected to positively impact corporate strategies in the coming years.

The broader context of climate change and its associated risks and opportunities remain pivotal to the future success of businesses, particularly as Europe advances its sustainability agenda. Through various measures such as including sustainability, resilience, and European preference criteria in public procurement for strategic sectors, promoting product labels that indicate carbon intensity and enable businesses to reap a ‘green premium,’ and addressing the private-public funding gap through initiatives like the Industrial Decarbonisation Bank, the EU is actively shaping a more sustainable and cost-efficient future for businesses across the continent. These efforts underline the importance of integrating sustainability into business strategies, ensuring resilience in the face of climate-related challenges.

Conclusion

This survey underscores the significant challenges and uncertainties facing Luxembourg’s business leaders in the coming years. Luxembourg CEOs have become increasingly aware of the need for radical business reinvention, which reflects both the broader global landscape of economic unpredictability, geopolitical tensions, and climate challenges, as well as the specific difficulties faced by Luxembourg’s firms in adapting to these forces.

The findings also highlight how Luxembourg CEOs have reported mixed results on 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.