Foreign direct investment inflows into Germany collapsed to a 17‑year low. According to a report by consulting firm EY, the number of new investment projects fell by 10% to just 548 in 2025. The negative trend has persisted for the eighth consecutive year.
Analysts point to key structural factors that have led global corporations to freeze or cancel financing for projects in Germany:
- Abnormally high energy prices and rising labor costs.
- A tight fiscal stance that reduces business profitability.
- Cumbersome bureaucratic procedures combined with a lack of government structural reforms.
In the Europe‑wide investment attractiveness rankings, Germany retained only third place, ceding the lead to France and the United Kingdom.
Henrik Alers, head of EY’s German arm, notes that while the British and French markets periodically show positive momentum, the German economy has been moving downward for years. Weak corporate sales and falling profits amid macroeconomic uncertainty are forcing foreign firms to reallocate capital to more flexible neighboring jurisdictions.
