Germany in the investment shock: increasing stress and falling attractiveness!

Germany in the investment shock: increasing stress and falling attractiveness!

Germany faces growing challenges in the international competitive environment. A current study by the business development agency Germany Trade & Invest (GTAI) shows that foreign companies are increasingly critical of Germany. Around 1,800 companies from Great Britain, France, the USA, Japan and South Korea have been interviewed, and the results clarify that many companies see the country as over-regulated and provided with a high tax and tax load. In addition, the German language is perceived as difficult to learn, which could deter potential investors. Despite these challenges, many companies consider the economic stability and the size of the market as positive factors.

The study shows that almost 60 percent of the respondents rate the infrastructure, scientific institutions and production conditions in Germany as good. Traditionally, Germany is assigned to economic strength, stability, innovative strength, qualified workers and a high work discipline. Specialists and the geographical location were also emphasized as strengths, while high operating and wage costs, linguistic and cultural differences as well as over-regulation were identified as significant weaknesses.

decline in investments

in parallel to these findings, the decline in foreign investments in Germany becomes alarming. In 2024 only 1,724 new settlements and extensions were recorded, a decline compared to 1,759 in 2023 and 1,783 in 2022. Despite a remarkable investment volume of 23.2 billion, development is classified as problematic. High energy costs and an uncertain political framework significantly burden the nature of the location. In particular, the dominance of American technology companies shows where the investment interest is concentrated, with great investments by companies such as Amazon, Microsoft and Apple in Germany.

It is also worth mentioning that in 2024 fewer than a third of the direct investments will flow from 2020 to Germany. Although the inventory of foreign capital has increased in Germany, the attractiveness of the business location, especially in the industrial sector, has decreased. Industry experts urgently call for reforms to ensure location attractiveness. This includes reliable framework conditions, less bureaucracy, affordable energy and the digitization of administrative processes.

economic renewal as a necessity

The new federal government is under considerable pressure to revitalize the economy and relieve the social systems. Medium -term reforms are required to promote investments in modern systems and research processes. The United States currently benefits from capital inflows and investment incentives, which increases pressure on Europe and Germany. In order to remain competitive, an increase in the research allowance and the introduction of tax measures such as special depreciation for investment investments is regarded as an important step.

A consensus on industrial policy strategies, especially in the area of skills and the pharmaceutical strategy, could help address central location disadvantages and to regain trust in Germany.

Overall, the current developments show how important it is to react to the challenges in international competition in order to preserve and expand Germany's economic substance.

For further information on the current challenges in the area of investments in Germany, see [OE24.at reports that…] (https://www.oe24.at/welt/deutschland/-zu-höhe- tax-zu-schwere-s-welt---welt-die-die-die-die-die-die-die-die-die--welt-die Display attractiveness] (https://blackout-news.de/aktuelles/schwindende-standorttractitaet-ausla-ausla-investitionen-das-das-jahrt-ruecklaufig/) and vfa.de explains the situation of the situation Direct Investments.