Economy & Politics

La Place is more optimistic than expected

Despite the risks associated with the consequences of the pandemic, players in the financial sector are looking to the future relatively calmly, reveals a survey of 350 decision-makers by Luxembourg for finance.

Despite the risks associated with the consequences of the pandemic, players in the financial sector are looking to the future relatively calmly, reveals a survey of 350 decision-makers by Luxembourg for finance.

(Jmh with Thomas Klein) – Unlike last November, executives from the financial and insurance sector active in the market seem to have regained hope, according to the results of the latest survey carried out by Luxembourg for finance (LFF). For the majority of 350 decision-makers interviewed by the financial center promotion agency, cautious optimism is emerging, as 50% of them believe that the world economy will soon return to its pre-crisis level.


Wi, Bank ranking .Finanzplatz Luxemburg.Foto: Gerry Huberty / Luxemburger Wort

Questioned by Luxembourg for Finance (LFF), the executives of the financial sector and insurance believe that the current health crisis will generate “a more volatile operating environment”. This should translate into lower operating budgets in 2021.


While only 6% of them believe that this horizon will still be in 2021 and 33% by 2023, a large majority of respondents (80%) expect the recovery to be faster in Luxembourg than in the rest of the world. A turnaround in the assessment of the situation which would be due in particular to “the actions of national governments and central banks which have injected massive amounts of funds into the economy,” said Nicolas Mackel, CEO of LFF, interviewed by our colleagues from the Luxemburger Wort.

This does not mean, however, that the wave of bankruptcies feared for months will not eventually arrive. “I do think that this phenomenon will occur, but the banks have prepared themselves for such failures and have set up appropriate reserves”, assures Nicolas Mackel, thereby repeating the speech held for several months by Claude Marx, director of the CSSF . On the other hand, the acceleration of the vaccination campaign in Luxembourg and the rest of the planet would also boost the optimism of market players regarding a strong and imminent recovery in economic activity.

Note, however, that the perception of the situation varies greatly depending on the business sector. While decision-makers active in insurance expect a rapid recovery, since 41% of them expect a return to a pre-crisis level in the first half of 2022, those from fintechs are particularly pessimistic since 20% of them believe that this level will not be reached until after 2023. An astonishing figure in view of the awareness of the potential of digitization during the crisis which could be explained above all by the precarious financial balance of these structures, more quickly put in default.

While cautious optimism appears to be the major feature of this study, respondents also expect disruptions stemming from the current geopolitical uncertainty. Direct reference to the tensions between the United States and China, while Brexit no longer appears to be a major concern. Quite simply from the fact that “the market players have been working for a long time in this new reality”, sums up Nicolas Mackel who no longer expects the arrival of new entities directly linked to this divorce between the United Kingdom and the United Kingdom. European Union.

With regard to jobs, the situation would follow the trend observed in recent years, namely a decline in back-office staff, linked in particular to the automation of certain missions or their relocation. “In return, new activities will emerge here with other qualifications”, tempers the CEO of LFF who underlines that “the number of employees in the financial sector has continued to increase over the last decade” . This is particularly the case in wealth management and private equity. The challenges ahead are still linked to digitization, since IT specialists with financial knowledge “remain extremely difficult to find,” recalls Nicolas Mackel.


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