The number of foreign investments in Germany continues to fall. In 2022 it reached its lowest level since 2013. Nevertheless, the Federal Republic is currently gaining in attraction.
International investors are increasingly withdrawing from Germany. For the fifth time in a row, their commitment has fallen in the past year, falling to its lowest level since 2013. In 2022, companies from abroad announced 832 investment projects in Germany, a decrease of one percent compared to the previous year. This is the result of a study by the auditing and consulting firm EY.
Germany will undoubtedly remain a strong and competitive location, said Henrik Ahlers, CEO of EY. “But on the cost side, Germany has recently lost a lot of attractiveness – especially for industrial companies.”
Other locations are also better positioned when it comes to research, development and digital innovations. “In this country, a lot of things just take too long and involve a lot of bureaucracy – whether it’s about planning and approval procedures or the expansion of the digital and energy infrastructure,” said Ahlers.
France remains at the top
According to the study, France remains the leader in the European ranking, where development has been much more dynamic than in Germany for several years. The number of investment projects in the neighboring country rose by three percent to 1,259 last year, after having increased by 24 percent in 2021. Great Britain ranks behind it, although the number of projects fell by six percent to 929.
“France in particular has left Germany behind in recent years,” said Ahlers. President Emmanuel Macron has managed to spark a dynamic with business-friendly reforms”. Germany is currently a long way from this.
In contrast to the weakening development in Germany, foreign investment activity has increased 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 value of 2019. No information was given on the amount of the investment volume.
Germany is still a top location
However: In a worldwide company survey carried out for the EY study, Germany is currently becoming significantly more attractive. The proportion of respondents who describe Germany as one of the top three locations in Europe has risen from 42 to 62 percent compared to last year’s survey.
France (47 percent) and Great Britain (43 percent) are well behind. “Last year there were great concerns about an acute energy crisis and production outages in Germany,” said Ahlers. “That could be prevented, and the supply chain disruptions resulting from the war in Ukraine and the sanctions against Russia were dealt with relatively quickly.”