Luxembourg's economy stymied by a shortage of space for development

In an interview with the Lëtzebuerger Journal, Luxembourg's Economy Minister Lex Delles confirmed the severity of the country's economic stagnation. Growth in 2025 is projected to be just 1%, half the previous expectations and not compensating for the effects of past crises, from pandemics and energy shocks to geopolitical conflicts and fluctuations in US trade policy.

One of the symptoms of stagnation is the shortage of available land for business. Of the 456 hectares earmarked for new or expanded industrial zones, only 106 are under development, and another 140 are in the planning stage. The remaining 210 hectares, according to the minister, "will not be developed in the next 10-15 years" due to legal, environmental or social land constraints.

This is confirmed by figures: according to the Chamber of Commerce and Industry, 100 companies are in urgent need of land for expansion, but at the end of 2024 there were only 15 hectares left in regional economic zones. The minister calls the situation "really urgent" and stresses that efforts are being made to launch a cadastre of industrial zones, optimise the use of existing areas and densify development.

A pilot project in the Triangle vert district in Ellingen, for example, proposes to do away with traditional green buffers between buildings in favour of shared green spaces and to allow for building heights. This not only solves the problem of land scarcity, but also creates conditions for ecosystems and recreational areas.

In addition, the ministry is revising the regulations to allow activities previously restricted to the craft sector in industrial zones. These include, for example, kindergartens, fitness centres, accounting offices, architectural offices or beauty salons, which can occupy the upper floors of buildings. This will expand the functionality and attractiveness of such areas.

However, entrepreneurs, many of whom have been trying unsuccessfully to expand for 10-15 years, face bureaucratic barriers, slow procedures and rising prices. To meet these challenges, the ministry has created a new structure, the General Directorate for Industrial Zones, with designated contact persons to speed up communication with municipalities and investors.

The Handwierkerhaff project - "craftsmen's houses" where companies can rent premises without buying land - is also under development, especially in the Wolser B industrial area between Dudelange and Bettembourg. Negotiations are also underway to acquire the site owned by Liberty Steel.

As for the more vacant plots in the national industrial zones, the minister explains that many of them are reserved for strategic industries, such as the HE:AL medical cluster in Esch. It would be inappropriate to locate small craft workshops such as roofing firms there.

The minister sees the reason for the current shortage as the rapid growth of the economy, which has not been kept up with infrastructure development. "The most important thing now is to act quickly to know where the available sites are and utilise them as efficiently as possible," Delles emphasises.