Foreign Direct Investment in Germany Falls to 17-Year Low in 2025, EY Reports
Overview of Germany's Foreign Direct Investment Decline
Investment Trends and Statistics
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.
Key Reasons for the Decline
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.
Comparative Investment Attractiveness in Europe
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.
Expert Insights and Economic Impact
EY Germany's Perspective
"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.
Company Investment Decisions
"Poor sales and profit performance, combined with uncertain economic conditions, are forcing many companies to postpone or cancel investments entirely," he added.
Investor Demographics and Sectoral Highlights
Leading Source Countries
Most investors in Germany were from the United States in 2025, overtaking their Chinese counterparts as the top investors.
Defence Sector Investment Surge
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)
