USA remains the most important foreign investor in Germany

Status: 05/22/2023 12:19 p.m

Irrespective of the high energy prices, the settlement of foreign companies in Germany has remained stable. The United States remains the top investor.

Growing interest from companies from the USA, Great Britain and Turkey has kept foreign investments in Germany almost stable, despite higher energy prices. A total of 1,783 new settlements and expansions were registered last year, according to data from the federal business development agency Germany Trade & Invest (GTAI). That was 23 fewer than in 2021, but 101 more than in 2020.

“Given the adverse circumstances – war against Ukraine, energy crisis and Corona aftermath – this is a success,” GTAI Managing Director Robert Hermann told Reuters.

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US investments despite IRA

The USA remained the top investor, with 279 projects alone. “That’s remarkable, after all there is enormous support for domestic investments in the USA through the so-called Inflation Reduction Act (IRA),” said Hermann. In second place in the ranking are Switzerland with 208 projects and Great Britain with 170. “Both countries do not belong to the EU, but they want a foothold and often choose Germany,” said the managing director.

China, on the other hand, only came fourth with 141 projects, the smallest number since 2014. “The corona pandemic definitely had an impact on this,” said Hermann. Business trips were temporarily not possible due to the People’s Republic’s strict zero-Covid policy, which may have made deals more difficult, delayed or even prevented. Turkey moved up to fifth place with 139 projects – a record.

skills shortage no barrier

The availability of renewable energies, such as wind power or photovoltaics, is becoming increasingly important when attracting investors. “Whether Microsoft, Apple or even smaller providers of data centers or battery manufacturers like Northvolt – this is an important argument for everyone,” said GTAI expert Achim Hartig. “The good availability of renewable energy is now a real locational advantage for Germany.” Their share of gross electricity consumption grew to a good 46 percent in 2022, and by 2030 it should be at least 80 percent.

On the other hand, the lack of space turns out to be a disadvantage of the location. “The availability of space is a problem,” said Managing Director Hermann. For large investments such as Intel or Tesla, areas of 100 hectares and more are often required, but there are hardly any left, especially in the western federal states. The shortage of skilled workers, on the other hand, is not an obstacle to settling in Germany. “All European countries are struggling with this,” says GTAI specialist Hartig.

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Announced projects worth 25 billion

The number of promised new jobs rose by around ten percent to 33,500. The announced investments increased to 25 billion euros, a large part of which goes back to the planned settlement of the US chip group Intel in Magdeburg – a project behind which there were recently question marks. But even without this, the result of 2021 would have been exceeded by one billion euros at eight billion euros. “That’s an outstanding number,” said Hermann.

“Germany remains an attractive location,” is Herman’s conclusion. This is also reflected in the fact that foreign companies are increasingly investing in future technologies, for example in the areas of semiconductors, battery production and recycling. Around 15 percent of international companies want to set up production or conduct research and development.

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