Survey: Germany as a business location receives bad reports

High taxes, expensive electricity, poor internet and declining quality of work: A study by the auditing firm KPMG reads like a very bad report for Germany as a business location. Accordingly, foreign corporations are increasingly critical of the Federal Republic and are scaling back their investments. For the tax system and the digital infrastructure, there were particularly bad grades: Here, Germany has “lost more competitiveness compared to the EU,” KPMG announced on Wednesday.

The auditors questioned 360 chief financial officers of German subsidiaries of international corporations from the USA, China, Japan and Europe. According to this, only 19 percent plan to invest at least ten million euros per year in Germany over the next five years. Four years ago, 34 percent wanted this.

The board members surveyed named an inadequate digital infrastructure as the greatest obstacle to investment. For 9 percent of the respondents it is “the worst in the EU”, for a further 24 percent it is “one of the five worst in the EU”.

German tax system “not competitive”

Another result of the survey: “Germany is too expensive – in terms of electricity, taxes and labor costs.” In the case of industrial electricity, Germany is now the front runner in the EU, with costs of 18.18 cents per kilowatt hour, and thus the bottom of the list. The managers rated the German tax system as “not competitive”.

Meanwhile, ailing roads, bridges and rails have also been criticized. Only 59 percent of the group board members surveyed ranked the logistical infrastructure among the top five in the EU.

And where does Germany score?

The business location receives the best ratings for standard of living (81 percent), public safety (80 percent) and political stability (80 percent). As a research location, 56 percent of the managers surveyed see Germany in the top group in an EU comparison. There has been significant progress in the availability of qualified specialists: According to the KPMG survey, 38 percent of the companies see Germany in the top five in the EU on this point.

However, at an average of 36.60 euros per hour, the labor costs are well above the EU average of 28.50 euros. Due to the high level of labor productivity, international investors have so far accepted this. For 72 percent of those surveyed, Germany was at the top. “However, investors are concerned about the stagnation in labor productivity in Germany that has been going on since 2018.”

KPMG board warns of even more bureaucracy

Also, only every third respondent counts Germany among the top five locations with an environment that promotes innovation. The attractiveness of the location is dwindling. “A further increase in regulation and bureaucracy as a result of the planned EU environmental legislation” is a threat to Germany as an investment location, warned KPMG divisional director Andreas Glunz.

Simone Menne, President of the American Chamber of Commerce in Germany (AmCham Germany) confirmed the trend. In the AmCham ranking, members rated Germany at the beginning of the month with a grade of 2.4, and in 2020 it was 1.9. But Menne also knows what US companies value in Germany: “Measures such as short-time work benefits, the rescue package for the self-employed and medium-sized companies, extra child benefit for families, help for artists and creative people and bridging aid for students will be a clear advantage during the corona pandemic seen for Germany as a business location. “

British investors’ interest has been increasing since Brexit

Robert Hermann, Managing Director of the federally owned company Germany Trade and Invest (GTAI), paints a much better picture of his experience with companies from Great Britain – for many, however, Brexit is likely to be a driver. “The interest of British companies in Germany has risen sharply since the Brexit vote in 2016,” Hermann told the dpa. According to Hermann, around 40 percent of British companies that invest in Germany name Brexit as an influencing factor in their investment decision.

But there is also “potential for improvement,” said Hermann. However, he did not include the quality of work, which according to the KPMG study has declined. On the contrary: “One of the most important reasons for foreign investors to come to Germany is, among other things, the well-qualified employees.”

In other studies, Germany comes off better

The executive Federal Ministry of Economics did not comment on the specific results of the study on request and referred to other studies such as the ranking of the World Economic Forum 2019, in which Germany was ranked 7th out of 141. There are also foreign investment projects that speak for Germany’s popularity. One example is the Tesla factory in Grünheide near Berlin. However, there is still no final environmental approval for them, which Tesla boss Elon Musk has already criticized.

“There are certainly challenges,” admitted the ministry in its statement, but something is also being done about it. For example, an amendment to the Telecommunications Act that will come into force in December is intended to improve the digital infrastructure, and the high electricity costs are countered with federal subsidies for the EEG surcharge.

You can see in the video: According to a Bertelsmann study, women are the main victims of the home office. They rate their workload higher at home. 23 percent of respondents also find it difficult to switch off after work.