Can Luxembourg compete with the likes of Paris and Hong Kong to attract high-quality staff from abroad? Jean-Jacques Picard looks at what it has to offer.
The financial business is one of reluctance and privacy. The Luxembourg financial centre has represented those values for decades. This attitude reflects even in the physical appearance of the financial centre. Anyone looking for skyscrapers and business districts like we know them from other cities will be disappointed. Instead, parts of the financial centre are located on a hill outside the town – though outside the town is never really far away in Luxembourg. Whereas the first banks established in the country are still located in the old city centre, five minutes further by car, in the midst of the historic fortress town. However, a lack of pretentious buildings is not equivalent to a lack of business opportunities, culture and attractiveness.
Luxembourg has its very own and unique charm. More than 150,000 commuters who work in the country, most coming daily from France, appreciate that. The ones who decide to settle down will inevitably fall under the spell of the tiny Grand Duchy.
Often, it is the small details that tip the scales. Luxembourg, according to the latest Mercer study, is the safest capital in the world. Due to its central location in Europe, it can provide not only access to a plethora of cultures and regions, each of them only a few hours away, but also to major European markets on the business side. Of course, such a variety of cultures also brings certain demands: locals speak at least three or four languages, while employees have to demonstrate the same abilities.
Meanwhile, the multicultural environment can inspire and enrich daily life. Recently, a French mystery-shopping institute voted Luxembourg Avenue de la Liberté as the second-most attractive shopping street in the world.
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However, the business opportunities speak for themselves: Luxembourg is the largest investment fund centre in the world after the United States and the premier private banking centre in the eurozone. With more than €2 trillion in assets under management, approximately 3,800 funds representing more than 13,000 sub funds are domiciled here. Over the past 20 years, it has built its position as the most popular domicile for Ucits funds and has become the leading centre for global fund distribution. Luxembourg Ucits funds have become a brand recognised around the world.
Luxembourg-domiciled investment structures are distributed in 58 countries around the globe, with a particular focus on Europe, Asia, Latin America and the Middle East. In parallel, Luxembourg has developed a strong track record in alternative investment products and bespoke investment structures, such as funds of hedge funds, private equity vehicles and real estate funds.
The main reasons for its success as a financial centre are the political stability of the country and a business-friendly government that is always keen to attract new businesses and to develop niches. Easy access to decision makers, as well as quick decision-making processes help make the country very attractive. A mutual trust between companies and government creates a favourable, internationally-recognised business environment with the unique capacity to create new business models.
The high level of cross-border trade and employment has already attracted international companies such as eBay and Apple, which have chosen Luxembourg as their European hub.
Nevertheless, competition between centres of excellence in finance is high, especially when it comes to specialised sectors like the fund industry or information technolgy. A highly-skilled workforce is the condition for high-quality services. The Luxembourg domestic labour market is too small to fulfil all these needs. With only about 511,000 inhabitants, the Grand Duchy is the smallest European country after Malta. Therefore, the Luxembourg government introduced its new expatriate tax regime in 2011, which raises the attractiveness of moving to Luxembourg for employees and employers. Moreover, there are still plenty of other reasons to choose it as a place to live and work: Luxembourg’s size and easy access to neighbouring markets keep consumer prices in check, meaning that with high take-home salaries the purchasing power of residents is one of the highest in Europe. Also, it is one of a few countries in Europe that has an AAA rating and guarantees fiscal stability, a fact the high-skilled workforce naturally benefits from.
The British expat community constitutes a very active group in Luxembourg in terms of business organisations and lifestyle activities. Grouped in the British Chamber of Commerce, English businesses can represent their professional interests. Working parents can also benefit from a strong childcare system and several international schools, where pupils are taught in their mother language.
On the cultural side, Luxembourg offers museums, theatres and concert halls that attract international artists in all fields. Like no other city in the Great Region of Luxembourg, France, Germany and Belgium, the economic stability has made it possible to develop a unique conurbation of cultural institutions in the capital with offerings for every taste. It is also a fixed dot on the map for international musicians’ concert tours. The widely varied network of persons in charge in the cultural sector is unmatched in the Great Region.
In terms of branding, Luxembourg as an investment fund centre, a good job is already being done. Still, a similar success for Luxembourg as an interesting place to work is missing. That brings up the question of whether this is intended at all. An aggressive branding of the Grand Duchy and its financial centre would not fit its mentality. Otherwise, its charm might be eroded by trying to appeal to a wider audience and become someplace else.
Jean-Jacques Picard is head of communications at Luxembourg for Finance
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