Frank Krings (Independent Director): Germany’s shift, Luxembourg’s response

Frank Krings, formerly Deutsche Bank’s CEO for Luxembourg and for Western Europe and now an independent director and adviser, says Luxembourg has a symbiotic relationship with Germany and France, and can contribute to a European economic and defence agenda through its stability, financial expertise and solidity.

What impact on Luxembourg do you anticipate from Germany’s general election?

The election in Germany was just a few weeks ago and coalition talks are still ongoing, but it’s a fair assumption that the Christian Democrats and Social Democrats will form a new government. We detect a sense of urgency to get things done, as well as a reflection that, like many other countries in Europe, Germany has become more conservative. Both Germany and France have seen a move from the political centre to the outer edges, and they are not alone. For the time being, Luxembourg is the only country that has maintained a stable majority in the centre of the political spectrum – which is a good thing

What issues were most important for the German electorate?

One of the key issues in the election was the state of the economy, which is more fragile than people might see from the outside. Germany remains an export-oriented open economy, but it faces challenges arising from the cost of energy. The second factor that dominated the campaign was the question of immigration into the country and Europe as a whole. Meanwhile, there is the war in Ukraine and recent developments that have cast doubt on the transatlantic partnership. The positioning of the US administration toward Europe and its other geopolitical partners is a wake-up call. However, there is a very strong sense of urgency for Germany to become a credible and dependable partner again in the European orchestra of nations.

“We need to state inconvenient truths and ensure that people don't take the status quo for granted.”

How should Luxembourg respond to the complex economic and geopolitical environment?

I would urge politicians and other decision-makers to focus more on communication with the wider population, really explaining the situation as it is and making people understand what Luxembourg depends on for its political independence and business model. We need to state inconvenient truths and ensure that people don't take the status quo for granted. Luxembourg needs to improve its competitiveness – not to compete with France or Germany, but in its own interests, as well as to promote Europe’s overall competitiveness. We are underinvested in technology, which can be a difficult conversation because in some areas, technology will replace existing manual jobs. The other element is labour inputs – working less is not a strategy. We've benefited from a peace dividend in the 30 years after the fall of the Berlin Wall and the opening of China’s economy, but now we need collectively to work harder and embrace technology as life in the outside world gets tougher.