Less foreign projects in Germany

Author: Osman Cetinkaya
Date: 05.06.2019

Germany not in the first place for the first time

According to a manager survey conducted by the consulting firm Ernst & Young (EY), foreign investors invested significantly less in Germany last year. As part of the study, 506 decision-makers from companies worldwide were surveyed by a market research institute.

The number of projects in 2018 fell by 13 percent to 973. In a Europe-wide comparison, Germany has declined for the first time since the first survey in 2005. “Germany is no longer the growth engine of the European economy,” commented EY German chief Hubert Barth. Positive dynamic and new growth impulses are urgently needed for an ascent.

Germany did well in terms of political stability and predictability, but “a competitive tax system, a mood of economic and political optimism and openness to new technologies are also important factors”. Germany has a lot to catch up on here.

According to the survey, the strengths of the Federal Republic are its infrastructure, its politically and legally stable environment and the qualifications of its workforce. The weaknesses, on the other hand, lie in the flexibility of labor law, tax issues, incentives and benefits for companies and labor costs.

Great Britain better placed

More than a third of investors expressed negative views on their business in Germany. Last year the figure was around a quarter. With the number of investment projects, Germany was replaced by France and slipped to second place.

First place is taken by Great Britain despite uncertainties of the Brexit. A total of 1,054 projects were completed there, although there was also a decline of 13 percent. In total, four percent fewer projects were recorded in Europe.

Last year, US companies were the most frequent to operate in Germany. This is followed by companies from Switzerland, China and Great Britain. However, these companies implemented significantly fewer projects in Germany.

USA created the most jobs

According to the EY methodology, a project is an investment that involves the “creation of new sites and new jobs”. How many jobs are created is irrelevant. It does not include takeovers or replacement investments that do not create jobs.

According to EY, most jobs were created by the USA with 73,000 new jobs. German companies are in second place with around 57,000 jobs. This is followed by China with around 16,000 jobs.

According to the results, German companies continued to invest abroad. 695 projects were launched in 2018, more than ever before. The most investments were made in France (187 projects), while in the UK a third less were made (71 projects).