Finance sentiment up amid worries over EU market, talents
Luxembourg's financial sector is much more optimistic than just a year ago, a survey by an industry development agency has found, but finance institutions are worried about a talent gap, the risk of market fragmentation, inflation and housing prices.
Business confidence is significantly up compared to the previous 12 months, as the pandemic hit economies hard, according to more than 60% of the over 400 executives and senior leaders from Luxembourg’s financial centre surveyed by Luxembourg for Finance in October.
In line with the increased confidence, more than half of individuals surveyed expect their organisation to increase global investments in 2022, a third more than just a year ago. Close to half of respondents also said that the pandemic no longer had an impact on their business, according to the report released on Monday.
Close to 60% said they were not concerned about the long-term effects of Brexit anymore, "showing that the industry has adapted well to the new situation".
However, close to 80% of respondents voiced concern over the growing fragmentation within the EU's single market, with participants stressing the need to overcome the limits of the nation state for EU financial services to be competitive globally.
Only last week, the same Luxembourg financial services lobby said it was teaming up with European counterparts to strengthen the sector across the EU, as the bloc struggles to fulfil its promise of creating a unified capital market across its 27 members.
Access to talent remains an issue in the Grand Duchy, with 51% of respondents saying they are not confident in their organisations’ ability to address the issue, an increase of 6 percentage points compared to April.
The respondents from the financial sector are also concerned about asset bubbles and inflation, accumulation of public debt, the rapid rise of energy prices, and skyrocketing real estate prices, as Luxembourg faces one of the worst housing squeezes in Europe.