Foreign direct investment into Germany fell by 12 percent last year as Europe’s economic powerhouse attracted fewer business opportunities for overseas investors for the sixth consecutive year.
A survey by professional auditing firm EY found the number of investment projects announced by international companies in Germany fell to just 733 in 2023 — the lowest figure since 2013.
Germany’s economic decline is evidenced by the fact that foreign investors are refraining from pulling the trigger on new opportunities in the country. Since 2017, foreign investment projects across Germany have declined by 35 percent.
It remains third on the list of European countries to attract the most investment opportunities behind France, which remained on top despite a drop of 5 percent to 1,194 projects to commence last year, and the U.K. which saw new investment opportunities increase by 6 percent to 985.
According to EY’s Europe Attractiveness Survey, investors ranked London as the most attractive city for investment, with Paris a close second.
EY’s board chairman, Henrik Ahlers, blamed the economic and political landscape in Germany as a contributing factor to its decline.
“In Germany, we have a high tax burden, high labor costs, expensive energy, and at the same time a paralyzing bureaucracy. The result: Investments are falling, the mood among consumers and companies is in the basement, and the economy is developing weaker than in any other industrial country.”
While Germany faltered, other European countries saw their share of foreign direct investment (FDI) soar last year. Hungary, for example, saw the biggest increase of 54 percent in new investment projects in the country, creating a total of 11,349 jobs compared to Germany’s 14,261.
Switzerland and Turkey came second and third in terms of percentage growth, reporting 53 percent and 17 percent increases in foreign investment, respectively.
The European countries to experience the sharpest decline in FDI were Ireland (-46 percent), Finland (-31 percent), and Austria (-21 percent).
In total, FDI projects across Europe dropped by 4 percent last year from 5,962 to 5,694. The top non-European countries of origin for investment were the United States at 19 percent, China at 5 percent, and Japan at 3 percent.
