Foreign investment continues to slide in Luxembourg, major survey finds

Despite record-high intention to invest in 2023, Luxembourg saw a slight dip in FDI (Foreign Direct Investment) projects, from 36 in 2023 to 33 in 2024, according to a survey by Big Four firm EY released on Thursday.

Business services dominate in the Grand Duchy, comprising 55% of all FDI projects, which is more than double the European average.

While FDI in Europe’s finance sector declined by 5%, Luxembourg bucked the trend with a 20% increase, reinforcing its reputation as a financial hub, particularly for investment funds. Finance made up 36% of Luxembourg’s FDI projects, followed by business services within finance (15%) and IT/software (15%).

In 2024, FDI across Europe fell by 5% to 5,383 projects, which is the second consecutive year of decline and the lowest level in nine years. US-backed projects in Europe dropped 11% from 2023 and 24% from 2022 last year.

The EY study does not say what the overall value of FDI projects in Luxembourg was.

In its fourth annual Luxembourg Attractiveness Survey EY Luxembourg evaluates the country’s global competitiveness and tries to identify obstacles to growth from the perspective of current and prospective investors.

The report notes that for the first time since 2018, France, the UK, and Germany together attracted less than half of Europe’s FDI – with double-digit declines in each: France (-14%), the UK (-13%), and Germany (-17%). In contrast, Spain (+15%) and Italy (+5%) demonstrated Southern Europe’s growing appeal.

Across the continent, industry, manufacturing business services and software/IT services led the downturn in FDI. There was growth in emerging areas such as semiconductors, defence, and pharmaceuticals.

Only 62% of investors expect Europe’s attractiveness to improve over the next three years – down from 75% in 2023. In contrast, expectations are higher for the US (74%) and China (67%).

Investor interest in Luxembourg dipped slightly, with 56% planning to invest, down from 60% the year before, and only 57% intending to expand operations, down from 72%. Luxembourg now ranks 13th in attractiveness, just behind Belgium and Italy. Luxembourg has one of the highest shares of investors in Europe who have not altered their investment plans, however.

The business leader surveys were conducted online at the start of 2025.

At the European level, the long-standing study has been released for over two decades. It combines hard data on FDI with insights from international business leaders gathered through a dedicated survey.

“This fourth [Luxembourg] edition allows us to tell a more complete story,” said Olivier Coekelbergs, EY Luxembourg country managing partner. “Our first survey was exploratory, lacking a baseline for comparison. The second gave us a benchmark, but one year of data wasn’t enough to reveal trends. The third followed national elections – too early to assess the impact of new policies. This year’s research, however, comes amid global geopolitical uncertainty, which has dampened FDI worldwide, including in Luxembourg,” he said.