Responses from 183 senior leaders across firms based in Luxembourg’s financial centre – including a mix of global and local asset managers, banks, insurers and professional service providers – revealed that three quarters (74%) of them do not expect to see economic conditions normalise to pre-crisis levels for at least 1 year, and potentially 2 to 3 years.

82% of respondents to a Luxembourg for Finance snapshot survey conducted in early May said they see covid-19 as having a slowing effect on globalisation, with 51% also expecting an increasing fragmentation of the EU single market.

A global recession was the overwhelming concern for most bosses, followed by financial stability. This was despite over 80% of saying the steps taken by Governments, central banks, and other authorities to mitigate this crisis were either “excellent” or “above average”.

Respondents saw digitalisation (57%), sustainable finance (52%) and global growth (43%) as the top three sources for their future expansion, focused primarily on Europe (90%), Asia (34%) and the US (25%).

Just 8% thought business travel would return to pre-crisis normality quickly. Instead most saw business travel as being limited to only the most important events.

Commenting on the survey, Nicolas Mackel, CEO of Luxembourg for Finance, said:

“Despite having high praise for the official response to this pandemic, financial leaders are clearly worried about an enduring global recession. They see covid-19 as potentially having both a slowing effect on globalisation and fragmenting the EU single market. However, they also see Europe, the US and Asia, along with digitalisation, sustainable finance and global growth, as their most obvious commercial opportunities going forward.

“This shows the financial sector is still thinking in cross border and international terms, despite the potential threat to these concepts from covid-19, and their possible exploitation by populist elements. For this reason, we must ensure governments, central banks and regulators do not raise their drawbridges, and instead continue to make the case for globalisation as a positive force for social change, business growth and economic development.

“We must let the global financial sector play a core role in supporting real economies around the world, but that means framing how this pandemic does not spell the end for our global system of capital flow, trade and relationships. Now more than ever finance needs to be fluid and deployed for the benefit of all.”