Sharp Decline in Foreign Direct Investment Signals Growing Concerns for Germany’s Economic Future

Germany experienced a 10 percent drop in foreign direct investment (FDI) projects in 2025, totaling 548 projects, the lowest since 2009. Henrik Ahlers, CEO of EY Germany, described this decline as an "alarm signal" for the country's business location. Contributing factors include high tax and labor costs, expensive energy policies, and extensive bureaucracy. Moreover, the widely recognized "reform incapacity" of Germany exacerbates the problem, diminishing investor confidence.

This downturn in foreign investments parallels a significant 24 percent decrease in German companies' investment projects abroad within Europe, falling to 484 projects—the sharpest decline since 2006.

Illustrating the broader trend, pharmaceutical giant Boehringer Ingelheim has canceled planned investments worth 900 million euros in Germany. Médard Schoenmaeckers, head of Boehringer Ingelheim Germany, confirmed this decision and remarked that future innovations are unlikely to occur in Germany under current circumstances. He highlighted the necessity for the company to remain competitive with developments in the USA and Asia, where innovation environments are more favorable.

The combined effect of rising operational costs, energy expenses, bureaucratic hurdles, and stalled reforms is making Germany increasingly unattractive for investment. Industry leaders warn that unless these issues are addressed, Germany risks falling behind in global competitiveness and innovation capacity.