Study: Foreign investments in Germany declining

Study: Foreign investments in Germany declining

Germany is becoming less attractive to foreign investors. That shows a new study. In a European comparison, the Federal Republic only ranks third.

According to a new study, international investors reduced their involvement in Germany last year for the fifth time in a row.

In 2022, companies from abroad announced 832 investment projects in Germany – a decrease of one percent compared to the previous year. This emerges from a study by the auditing and consulting company EY, which was published in Stuttgart. This puts Germany in third place in a European comparison.

The gap to Primus France increased further in 2022. EY recorded 1,259 investment projects in the country, three percent more than in the previous year. Next in line was the non-EU country Great Britain with 929 projects. EY recorded the highest number of foreign investments in Germany in 2017. At that time, 1124 projects were counted. Before the 2019 corona pandemic, the number was 971. EY has been conducting the study since 2006.

EY CEO Henrik Ahlers sees this as a worrying development. “President Emmanuel Macron has managed to spark a remarkable dynamic with business-friendly reforms in France,” he said according to the statement. Germany is currently a long way from this.

“On the cost side, Germany has clearly lost its attractiveness”

According to Ahlers, Germany is undoubtedly still a strong and competitive location. “But on the cost side, Germany has recently lost a lot of its attractiveness – especially for industrial companies,” he said. Other locations are also better positioned for research, development and digital innovations. In this country, many things simply take too long and involve a great deal of bureaucracy.

In contrast to the weakening development in Germany, foreign investment activity has recovered slightly throughout Europe. In 2022, the number of announced projects increased by one percent to 5962. The largest percentage winners were Poland, Portugal and Turkey. Overall, however, the pre-pandemic level was still missed. The number of projects was seven percent below the figure for 2019. No information was given on the investment volume.

The study said that hopes that there would be a strong upward trend in 2022 after two difficult years of the pandemic were not fulfilled. The weak increase is not surprising given the far-reaching consequences of the Ukraine war.

Source: Stern

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