2026: What's in Store for Luxembourg After a Year of Transition?

The start of a new year is often a time for reflection, with Luxembourg entering 2026 after a year that combined transition with tradition.

From a change to the head of state to policy debates on pensions, education and social cohesion, the past twelve months have shaped the backdrop against which 2026 will unfold.

Institutional & Political Life

The most defining national moment of 2025 was undoubtedly the "Trounwiessel" in October, when Grand Duke Henri abdicated in favour of his eldest son, now Grand Duke Guillaume. The three-day celebrations brought together thousands of residents, cross-border workers and international visitors (including foreign dignitaries) alike. This major event marked a moment of transition but also continuity for Luxembourg.

In his early speeches, Grand Duke Guillaume has emphasised the need to "build bridges" - between generations, traditions and a rapidly changing society - a message that resonated in uncertain times and that will be tested in the years ahead. In 2026 and 2027, the Grand Duke and Grand Duchess will have more opportunities for public engagement as they undertake "Joyeuses Entrées" (official visits) across the country - a long-standing tradition marking a change of reign. This generational transition will also become visible in everyday life in early 2026, with new Luxembourg euro coins bearing the bust of Grand Duke Guillaume entering circulation.

Politically, Luxembourg also experienced a mini government reshuffle in December following Georges Mischo's resignation as Minister of Labour and Minister of Sport. Expectations are high that his successor, Labour Minister Marc Spautz, will make headway on labour market challenges, supported by his close ties with trade unions.

Economy, Finance & Social Pressure

One of the most contentious issues of 2025 was the long-debated pension reform. Despite criticism from unions - notably the OGBL and the LCGB - MPs adopted the reform bill in December, with the comparatively minor changes taking effect progressively from 1 January 2026. These aim to gradually align the effective retirement age (currently around 60) with the legal age of 65 and increase the overall contribution rate from 24% to 25.5%.

At the same time, pensions will increase by 1.5% from January, while another wage indexation tranche (+2.5%) is expected later in 2026.

Yet these adjustments come against a backdrop of persistent social pressure. Almost one in five residents and one in seven workers are at risk of poverty - a paradox in a country with strong public finances and high average incomes. Grand Duke Guillaume himself acknowledged this reality in his first Christmas speech, highlighting how rising living costs are making it increasingly difficult for some households to make ends meet.

At the end of 2025, Luxembourg MPs also voted on another contentious government bill extending permitted shop opening hours (including on Sundays). Such reforms reflect economic realities but remain socially sensitive.

Housing pressures and the labour market also remain sources of concern. As of 30 November 2025, unemployment stood at 6.2%, with nearly 20,000 jobseekers registered with ADEM. Announcements such as planned job cuts at Amazon (a major employer in Luxembourg) have fuelled uncertainty, even if forecasts suggest gradual improvement in the labour market. High housing costs also continue to weigh heavily on households and are increasingly seen as a factor affecting talent attraction and retention, despite continued government investment in affordable housing.

Meanwhile, other cost-related measures will continue to shape daily life in 2026, including a further €5 increase in the CO2 tax to €45 per tonne from 1 January.

Public health will also be in focus at the start of 2026, with Luxembourg taking part in "Dry January" for the first time. The decision has already sparked debate, with the Horesca sector expressing reservations, while others (such as the upcoming Ask for Angela Luxembourg initiative) have described it as an opportunity both to tap into a new market and to promote the health benefits of reduced alcohol consumption.

Security, Defence & International Positioning

Internal security and social cohesion remain closely linked. The introduction of body cameras for police officers in summer 2025, alongside rising reports of burglaries and pickpocketing, has intensified debate around safety, particularly in Luxembourg City.

At the international level, the Luxembourg government formally recognised the State of Palestine at a UN conference in New York in September 2025, while maintaining strong political and military support for Ukraine.

Defence policy will remain prominent in 2026 as Luxembourg continues to increase spending in line with NATO commitments - the country was on track to meet its spending target of 2% of Gross National Income (GNI) by the end of 2025 but will have to significantly increase its efforts to reach 5% by 2035. The main question here is: Where will the money be spent? The launch of the state's Defence Bond in mid-January 2026 signals a new attempt to involve citizens in this effort.

Cybersecurity is another area of growing importance, with LuxTrust going offline on 16-17 December, meaning authentication of ebanking and myGuichet services was on hold for almost 24 hours. While the company referred to a "technical incident", it did not reference "cyber attack" or similar in its official communications on the subject. However, it did highlight the risk of Luxembourg just having one recognised authenticator as the single supplier was out of action for a period.

Mobility, Energy & Environment

Mobility in Luxembourg also continues to evolve. The opening of the tram extension to Luxembourg Airport in Findel in March 2025 marked a major milestone, with further extensions / spurs - including the line from Stäreplaz (Place de l'Étoile) to the Centre Hospitalier de Luxembourg (CHL) and along the Boulevard Konrad Adenauer in Kirchberg - expected to progress in 2026. Carpooling radars on the A3 motorway are expected to be used to begin issuing fines (after the test phase), while rail works between Bettembourg and Luxembourg City will continue to test commuters' patience before ultimately providing an enhanced service.

Climate policy remains a hot topic as well. Studies by the Chamber of Employees (CSL) and Fondation IDEA have warned that Luxembourg risks missing its emissions and electric vehicle (EV) targets, respectively, without stronger measures, despite progress in electromobility. Luxembourg's participation in COP30 in Belém, Brazil, reaffirmed its international commitments, but domestic implementation is not without its challenges.

Education, Language & Identity

Education and language policy also sparked debate in 2025. Parliament's approval of the literacy language reform - allowing parents to choose German or French for primary school children's literacy from 2027 - highlighted the impact of demographic change on national identity. The Ministry of Education also announced plans for a new public European school in Schifflange (expected to open in 2028), in response to increasing demand, while 2026/27 will see the extension of compulsory schooling to the age of eighteen to combat early school dropouts.

Language debates extended beyond education. The Luxembourg Chamber of Commerce sparked discussion with its proposal to introduce English as an additional official (administrative) language to improve economic competitiveness - a suggestion welcomed by some but viewed more cautiously by others. It is likely that 2026 will see this topic explored in more detail.

At the same time, the government is continuing its efforts to promote the visibility of Luxembourgish through bilingual signs on motorways, at train stations and at town entrances. The Culture Minister also hinted at expanding Luxembourgish language courses in response to soaring demand.

In any case, multilingualism and multiculturalism remain defining features of the Grand Duchy  and are central to ongoing debates about inclusion, cohesion and identity.

Culture & Sports

Culturally, Luxembourg continues to punch above its weight. Several major international acts are set to perform in the Grand Duchy in 2026, including OneRepublic at a free City Sounds National Day concert in June. After performances by Green Day, Justin Timberlake and Guns N' Roses, among others, in 2025, Luxexpo Open Air 2026 will welcome big names such as Robbie Williams, Lenny Kravitz and Katy Perry, while the Rockhal in Esch-Belval is hosting Jason Derulo, MIKA, Sean Paul and Dermot Kennedy. Another highlight is the Luxembourg Song Contest (LSC) in January, when Luxembourg will select its Eurovision 2026 representative.

Cultural highlights last year included Luxembourg's presence at Expo 2025 Osaka and, at home, the LUGA - Luxembourg Urban Garden open-air exhibition (postponed from COVID years), which was deemed a success.

In the world of sports, works are scheduled to begin on a major new sports complex in Luxembourg-Hamm in spring 2026, with completion expected by April 2029. On the international stage, Luxembourg is set to compete at the Winter Olympics in Milano Cortina, Italy, in February 2026.

Looking Ahead

After a year of transition, 2026 is unlikely to bring dramatic upheaval but should instead be a year of implementation and adjustment. Nevertheless, social, economic and geopolitical uncertainties are likely to persist, and Luxembourg cannot afford to overlook domestic social pressures. The challenge ahead is to ensure that necessary reforms - from pensions and education to climate and defence - align with social cohesion and foster inclusion.