Shaping Luxembourg’s Future: Interview with Lex Delles, Minister of the Economy, SME, Energy, and Tourism
Lex Delles was appointed Luxembourg's Minister of the Economy, SME, Energy, and Tourism on November 17, 2023, following the legislative elections of October 8, 2023, in a coalition government between the Christian Social People’s Party (CSV) and the Democratic Party (DP). Prior to this role, he served as Minister for Small and Medium-Sized Enterprises and Minister for Tourism.
Many small states worldwide, especially in Europe and the Middle East, advertise themselves as pro-business jurisdictions with favorable financial and legal systems. What makes Luxembourg a particularly good place to do business, and how does the government plan to maintain its competitive advantage?
Luxembourg stands out in several domains. Our unique strategic location at the heart of Europe, for example, gives companies privileged access to major EU markets, something that businesses value when time and connectivity matter. We have also built a robust infrastructure, both in [terms of] logistics and [digitization], which makes Luxembourg an ideal place for international, cross-border operations. We are leading the way in digital transformation, with constant investments in connectivity and secure data centers. We positioned the country as a European leader in data storage and cybersecurity. Hosting key EU institutions such as the European Court of Justice or the European Investment Bank strengthens our role as a multicultural European capital.
What I am particularly proud of is our multilingual and highly skilled workforce, along with our tradition of political and economic stability. The fact that Luxembourg has avoided labor strikes for decades means businesses can operate smoothly. Companies appreciate when their production never stops. It is a big competitive advantage compared to our direct European neighbors. Also, companies have very easy access to resources in Luxembourg. Public services are reactive and agile, [and] companies have uncomplicated and quick access to decision-makers, which is appreciated by businesses of all sizes.
Looking ahead, we are continuing to actively diversify our economy. Luxembourg is always moving forward as a frontrunner. While we have long been known for our strong financial sector, we are also investing in innovative industries, digital technologies, space technologies, clean energy, among many other future-proof sectors. This forward-thinking approach is how we maintain our competitive edge and trust from companies. Finally, I want to highlight that Luxembourg has built an impressive landscape for Research and Development [R&D], where a multitude of public-private initiatives work as an incentive for many companies to settle in Europe and install their R&D departments in the Grand Duchy.
Could you elaborate on your focus areas for growing the tourism industry in Luxembourg? How do you balance the economic benefits of tourism with quality-of-life concerns for Luxembourgers, particularly in light of the ongoing dominance of home-sharing platforms?
Tourism has always been close to my heart. We are focused on showcasing what truly makes Luxembourg special. From the multicultural vibrancy of our capital to the breathtaking landscapes of the Moselle wine region, Mullerthal (or “Little Switzerland”), and the northern Oesling region, there is so much to see. Outdoor activities, like hiking and cycling, are central to our strategy. I have seen firsthand how trends such as “glamping” and “van life” resonate with travelers who want to immerse themselves in nature while respecting the environment.
We are also home to a large sector of business events. Luxembourg, as home to several EU institutions and international businesses, is perfectly placed to host professional events, boosting our economy and international visibility.
As for home-sharing platforms, we have introduced regulations to ensure fair competition with traditional accommodations. For instance, properties exceeding 90 overnight stays annually must register as a business. This strikes a balance between supporting the tourism sector, protecting the housing market for residents, and respecting fair competition with professional accommodations, such as hotels. We are committed to sustainable tourism that not only grows our economy but also enhances [the] quality of life for everyone.
In your efforts to drive entrepreneurship and innovation within Luxembourg, are there any specific initiatives or partnerships that stand out to you, perhaps in collaboration with Luxinnovation or the Luxembourg Trade and Investment Office? How do these initiatives align with your broader vision for the country’s economic development?
Innovation is critical to Luxembourg’s future. I am excited about the various initiatives we have put in place to support innovation in all sectors, from independent workers, [to] small and medium enterprises, to the largest multinational players. As mentioned earlier, many public-private initiatives have been put in place, and my Ministry is focused on always growing the offer and responding to the needs of businesses—in artificial intelligence, for example. The Luxembourg Digital Innovation Hub (L-DIH) is helping companies enhance their digital capabilities, but it is not just about digital transformation.
We are deeply invested in R&D as the backbone of progress. For companies, for our economy, but also for the people. Institutions like the University of Luxembourg, the Luxembourg Institute of Science and Technology, and the Interdisciplinary Centre for Security, Reliability, and Trust are doing groundbreaking work in cybersecurity, materials sciences, and environmental technologies. I find it fascinating how these public-private partnerships foster collaboration between academia and industry to turn innovative ideas into real-world solutions.
Luxinnovation, our national innovation agency, plays a vital role by offering tailored support to all kinds of businesses, while the Luxembourg Trade and Investment Offices help us promote Luxembourg as a hub for innovation on the international stage. I also can’t forget about our leadership in green finance. Luxembourg is truly at the forefront of sustainable investments, which is key to our long-term vision of blending digital and green innovations to drive economic growth.
As Luxembourg aggressively pursues digital transformation, you have actively engaged with partners in Silicon Valley and beyond. Could you share some insights into these efforts and how they are shaping Luxembourg’s digital future?
Engaging with global tech leaders, especially those in Silicon Valley, is part of our strategy for staying ahead in everything digital. I mean, there is nothing better than to exchange ideas [and] competencies with our international partners. Luxembourg has been home to Amazon’s European headquarters for over two decades, and we have built strong relationships with other major tech companies. Just last week, I had a meeting with [eBay's] management. At the same time, we are also attracting very innovative startups from multiple sectors, often with a focus on sustainability, such as Lyten, which I recently visited in California. We are keen to work with companies looking to push the boundaries of advanced technologies.
Our collaboration with these partners is also crucial for advancing artificial intelligence and data management capabilities. We consider AI [to be the] main focus, so we support the deployment of AI applications in a variety of fields. Machine learning and predictive modeling, for example, have real-world applications in industries like healthcare, finance, and manufacturing. Our sovereign cloud initiative ensures that data stored in Luxembourg stays under national control and complies with European regulations. This, combined with our global partnerships, positions Luxembourg as a leader in digital innovation while safeguarding our data sovereignty.
Luxembourg has made significant investments in artificial intelligence and data storage through LuxConnect's establishment of a national optic fiber network. Could you discuss the strategic importance of these investments, and how they position Luxembourg as a digital leader?
Our investments in AI and data infrastructure are an integral part of our digital strategy. Luxembourg’s national optic fiber network, for example, provides high-speed data transmission across the country, which is essential for AI applications and big data analytics. This reliable, high-capacity connectivity is a game-changer for businesses no matter where in the country they are located. LuxConnect’s state-of-the-art data centers, operating under the highest security standards (Tier 4), are another critical piece of the puzzle. We have also developed “Clarence,” our sovereign cloud solution, which ensures that [stored] data is fully protected. This is particularly important for maintaining trust and security. MeluXina, our high-performance computer, supports advanced research in AI and other scientific fields. And we are not stopping there—we are keeping an eye on emerging technologies like quantum computing to ensure that Luxembourg stays at the forefront of digital innovation.
Luxembourg plays a unique role within the European Union in terms of energy policies and environmental sustainability. How is the country contributing to the EU’s goals in these areas, and what are some of the key challenges and opportunities you foresee in balancing economic growth with environmental responsibility?
Luxembourg is deeply committed to the EU’s climate goals, and we are making significant investments in renewable energy to support the decarbonization of our economy. We need energy policies that allow us to reach our sustainability goals, but we also cannot forget that companies, mostly manufacturing industries, will be central to implementing these changes. The decarbonization of industrial activities is one of the key aspects of this energy transition, so we are in close contact with all sectors of the economy to accompany them in these changes. That is why we focus among other [areas] on hydrogen, with the development of a hydrogen supply network that aims to drive hydrogen production and distribution in partnership with our neighbors. In addition, we are involved in offshore wind projects, and we are working on the reinforcement of our electricity grid to further expand our renewable energy sources. Collaboration with EU partners is vital for achieving the ambitious targets, and I believe that working together will help us balance economic growth with environmental responsibility. Luxembourg alone has little impact, and we have limited natural resources.
Solar energy is also a major focus for us, and we have put in place substantial incentives for households and companies to install solar panels. Green finance is [the] main area where we are making great strides. Luxembourg has become the main place for investments in green technology, building on our knowledge of international financial markets with our desire to drive international sustainable development. Luxembourg is integrating sustainability into its economic policies and driving innovation in clean technologies. Our goal is to make sure our economic development aligns with our environmental commitments.
Given Luxembourg’s focus on fostering a pro-business environment, advancing digital transformation, and driving economic growth, what are the key challenges that may impact Luxembourg's ability to achieve these goals, and how do you plan to address them?
The last couple of years have shown that we face major challenges in a highly connected, open world [when] the continuity of global supply chains is disturbed. When there are disruptions, most economies will face problems with inflation, with procurements, with slowing economic growth.
We faced some significant challenges when these global supply chains started to be disrupted during the COVID-19 pandemic. More recently, and this is still going on, we are facing the deep economic impacts of the war against Ukraine. Inflation has been a challenge worldwide. What these events have again highlighted is the need for resilience. That is why we are investing heavily—in renewable energy and clean technologies, for example. The government also took quick and [adaptive] measures to limit inflation for our residents. These measures, mostly price caps on energy, have helped households substantially and [have] kept Luxembourg’s inflation as the lowest in Europe.
This being said, our public finances are always a priority. Our debt is below 30 percent of our GDP, which is a great value in international comparison, and this government has agreed to keep that debt below the 30 percent level in the future. All major rating agencies rate Luxembourg’s solvency with a “AAA,” a major plus for our competitiveness. In Luxembourg, we also have the deep belief that every challenge [and] every crisis offers opportunities. Luxembourg has always been adaptable, and by fostering innovation and international cooperation, I am confident we can overcome future challenges and continue driving forward with our economic goals.
Ohrenstein spoke with Delles on September 20th, 2024. This interview has been lightly edited for length and clarity.
The views expressed in this piece are the interviewee's own and are not reflective of the views of the HIR, its members, its subscribers, or its editorial staff.