Luxembourg secures AAA rating from S&P and Moody's

Luxembourg has received validation of its AAA sovereign credit rating from two of the world's leading credit agencies within the space of two weeks. S&P Global Ratings confirmed its assessment on 30 January 2026, followed by Moody's on 13 February 2026. Both agencies assigned a stable outlook, signalling continued confidence in the Grand Duchy's economic and institutional fundamentals.

A strong foundation of institutional and economic resilience

The agencies highlighted Luxembourg's robust institutional framework as a cornerstone of its creditworthiness. Moody's pointed to the effectiveness of the country's regulatory and budgetary systems, while S&P emphasised policy predictability and political stability as key differentiators.

Economic flexibility also featured prominently in both assessments. Luxembourg's ability to attract high-value services, sustain strong immigration inflows, and maintain a competitive financial sector positions it well for continued growth. Both agencies project real GDP growth of approximately 2.1% in the coming years, supported by robust domestic consumption and sustained investor confidence.

Moody's additionally noted the strength of the state's asset holdings, which provide a buffer against potential shocks.

Financial sector remains a pillar of strength

Luxembourg's financial services industry continues to underpin its economic performance. S&P praised the sector's competitiveness, while Moody's highlighted the quality of financial supervision as a factor supporting long-term stability. This dual endorsement reinforces the Grand Duchy's position as a leading European financial hub.

Challenges on the horizon

Despite the positive outlook, both agencies identified areas requiring attention. S&P noted a deteriorating budget balance linked to rising expenditure on defence, social programmes and energy subsidies. Moody's flagged the long-term fiscal implications of demographic ageing and the economy's heavy reliance on the financial sector.

Public debt is projected to rise gradually to around 28.2% of GDP by 2027, though this remains modest by international standards. Higher interest rates have also weighed on the construction and real-estate sectors, presenting a near-term headwind.

Nevertheless, both agencies expressed confidence that Luxembourg's institutional capacity and prudent governance will enable it to navigate these challenges effectively.