Luxembourg retains AAA rating amid rising expenditure

On 30 January 2026, S&P Global Ratings affirmed Luxembourg's sovereign credit rating at the highest level of AAA with a stable outlook. The assessment highlights the country's high financial stability, despite a noticeable weakening of budgetary indicators in recent years.

S&P notes that pressure on public finances has intensified due to increased defence spending, expanded social programmes, energy price subsidies and measures to reduce the cost of living for the population. Nevertheless, the agency believes that these factors do not undermine the fundamental solvency of the state, given its moderate debt level and significant fiscal reserves.

According to analysts, Luxembourg's economic outlook will improve amid the global economic recovery and the expected decline in interest rates. As a result, real GDP growth in 2026–2029 could average 2.1% per year. The economy will receive additional support from sustained domestic consumer activity, which is particularly important in the context of external uncertainty.

Separately, S&P Global Ratings emphasises the country's investment attractiveness. Key factors remain the effectiveness of state institutions, political stability, a competitive financial sector and highly predictable economic and fiscal policy. Taken together, this, according to the agency, reduces risks for investors and allows Luxembourg to maintain one of the highest credit profiles in the world, even amid growing government debt.