Luxembourg Economy in 2025: Evolution, Diversification, Resilience

Situated in the centre of Europe and bordered by two major powers, France and Germany, the Grand Duchy of Luxembourg has always sought to maintain an openness to its neighbours, for reasons of security and to give itself access to larger markets. Historically the country did not have its own currency, increasing the need for openness and making monetary policy a key factor for integration. Luxembourg was one of the most politically stable, innovative and prosperous countries in the world in 2025. This chapter aims to analyze the specific features of Luxembourg’s socio-economic evolution from the 19th century to the present, highlight its strengths and weaknesses, and shed light on current dynamics—driven by innovation, digitalization, and a niche policy strategy—aimed at securing competitive advantages for a small state in a globalized world