Luxembourg construction stabilises, while hotels remain under pressure

According to fresh data from Luxembourg's National Institute for Statistics and Economic Research (STATEC), the country's construction industry has seen a subdued but encouraging trend in the first quarter of 2025, with the number of bankruptcies here falling to 50 companies, 15 fewer than in the same period last year. This decline may signal the beginning of stabilisation after turbulent months caused by inflation, rising material prices and delays in building permits.

The hotel and restaurant industry, on the other hand, is experiencing a worsening crisis, with 38 companies closing in the first quarter, 30 per cent more than a year earlier. This indicates continued difficulties in the hospitality sector, probably related to a slowdown in tourism, rising rental rates and staff shortages.

For the Luxembourg economy as a whole, bankruptcy rates have remained relatively stable, with around 300 companies going out of business in the first quarter of 2025, the same level as in the same period in 2024. However, the number of liquidations rose by 55 per cent, which looks worrying against a backdrop of general calm. STATEC explains that the increase comes on top of the record low level of liquidations in 2024, which mitigates the severity of the trend.

Liquidation, unlike bankruptcy, is most often initiated by the owners themselves, and may be part of a restructuring, voluntary closure or merger. The sharp increase in such cases may indicate that entrepreneurs are consciously winding down their businesses without expecting improvements in the market. This is especially true for microenterprises and freelancers, where administrative and financial barriers have become too high.

Although 50 bankruptcies in construction is still a significant figure, the 23% drop (from 65 to 50) is seen as a positive sign after two years of mounting pressure. In the context of European instability, Luxembourg fares better than a number of its neighbours, where construction crises lead to hundreds of bankruptcies every quarter. The key factor may have been the stabilisation of lending rates and the resumption of some frozen projects.