Berlin, May 21 (Reuters) – Foreign direct investment into Germany fell for the eighth consecutive year in 2025 to a 17-year low, a survey from professional services group EY showed on Thursday.
The survey cites high taxes, labour and energy costs as well as a lack of reforms to rigid bureaucratic procedures as reasons for the drop.
Foreign direct investment into Germany dropped 10% to reach 548 projects in 2025. Despite the drop, the country remained the third most attractive investment destination in Europe after France and the United Kingdom.
“While France and the United Kingdom have shown upward trends, at least at times, the German economy has been heading in only one direction for years: downward,” said Henrik Ahlers, the head of EY Germany.
“Poor sales and profit performance, combined with uncertain economic conditions, are forcing many companies to postpone or cancel investments entirely,” he added.
Most investors in Germany were from the United States in 2025, overtaking their Chinese counterparts as the top investors.
Investment in European defence projects rose by 84% in 2025 with seven projects in Germany, EY said, reflecting growing geopolitical tensions against the backdrop of Russia’s war on Ukraine.
(Reporting by Lena Rueckerl, Editing by Friederike Heine)
