Household electricity prices in Luxembourg are expected to rise by an average of 30% in 2025 due to the partial removal of the support measures in late 2022, noted the national statistics bureau, Statec, in its first ‘conjuncture flash’ (flash forecast) of the year on Tuesday 21 January 2025. Had the ‘price shield’ been fully lifted at the start of 2025, prices would have risen by 60%, Statec said. The price hike is also due to changes in the pricing of , which now account for both energy consumption and power draw. This reform aims to reduce the need for expanding the network’s capacity as part of the energy transition and to high power consumption peaks.

The impact of these price increases will vary depending on household equipment. For an average household consuming around 3,900kWh annually, without electric vehicles or heat pumps, the increase will be slightly below 30%. Households with heat pumps will experience a slightly higher increase, while those with electric vehicle charging ports installed could face price hikes nearing 50%, depending on the charging power used. For instance, households using a 3kW charging station would see a more modest increase of about 35%.

Services sector

Luxembourg’s non-financial services sector has experienced notable fluctuations in business confidence throughout 2024. After an improvement in sentiment during the first half of the year, confidence dipped in the third quarter before showing a steady upward trend in the latter part of the year. By December 2024, the confidence index reached 7.4 points, marking its highest level since May 2022, though still falling short of its long-term average.

This rebound in confidence contrasts with the general decline observed across the eurozone towards the close of 2024. Sectors benefiting from this positive shift include legal and accounting services, air transport, rental services, postal and courier services, and the hotel and restaurant industry. However, certain industries saw a decline in performance, particularly land transport, warehousing and auxiliary transport services, accommodation and IT consulting services, which showed weakening results towards the end of the year.

Housing

The Q3 2024 saw a slight increase in building permits, marking a positive turn following several quarters of declines while non-residential building permits experienced a substantial 36% year-on-year rise, although this category remains volatile. Residential permits, which had seen sharp declines in 2022 and 2023, showed signs of stabilisation. However, residential construction permits are still at , akin to those recorded in the early 2000s, and remain only half of their average levels from 2015 to 2022, reflecting continued weakness in the new housing market.

This trend mirrors the broader pattern observed across the eurozone, where building permits have been on the decline since early 2022, showing no clear signs of recovery.

The persistently low levels of building permits in Luxembourg suggest ongoing challenges for investment and activity within the construction sector in 2025, said Statec.

Inflation

In 2024, the price escalation in the hotel, restaurant and cafe sector contributed significantly to the divergence in inflation rates between Luxembourg and the eurozone. A key factor behind this divergence is the relatively lower increase in food prices in Luxembourg, which rose by 25% since December 2019, compared to the 31% increase seen across the eurozone. Additionally, Luxembourg’s energy price increases were less severe than those in other parts of the eurozone. The price of natural gas for small businesses in Luxembourg rose by 130% through the first half of 2024, the highest increase within the region, while electricity prices for small businesses saw a more modest rise of 10%, compared to 32% in the broader eurozone.

The sharpest price increases in Luxembourg were seen in fast food (up 25% since December 2019), followed by restaurant beverages (24%), non-alcoholic drinks at cafes (22%), meals at restaurants (21%) and alcoholic beverages at cafes (19%).

Temporary employment

Temporary employment showed a modest recovery in Q3 2024, with the number of hours worked by temporary workers increasing by 3.3%, marking the largest quarterly rise since Q3 2020. The construction sector saw the most significant growth in temporary labour, up 4%, followed by transport and industry. Despite this growth, the overall number of temporary workers stabilised at just over 7,000 in the first three quarters of 2024, representing a 20% decline from pre-pandemic levels, which equates to approximately 1,800 fewer temporary workers.

The statistics bureau , automatic rises in salaries and pension payments, was forecast to take place in the second quarter of 2025.