Foreign investment into Germany plunges to 17-year-low, EY survey says

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.

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.