Germany has lost out in Europe as a business location

Study
Germany has lost out in Europe as a business location



Source: DPA

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Tesla in Brandenburg, Intel in Magdeburg: Germany is an attractive location for foreign corporations. Nevertheless, other countries in Europe still have the edge. What makes other locations more attractive?

Aerial view of the Fab 34 under construction in Leixlip, Ireland: Even though Germany has recently been able to persuade well-known companies such as Intel or Tesla to set up new locations in Magdeburg and Brandenburg, the country is currently lagging behind other economically strong nations in Europe such as France or Great Britain, according to a study.
Aerial view of the Fab 34 under construction in Leixlip, Ireland: Even though Germany has recently been able to persuade well-known companies such as Intel or Tesla to set up new locations in Magdeburg and Brandenburg, the country is currently lagging behind other economically strong nations in Europe such as France or Great Britain, according to a study.

(Photo by Intel )

According to a new study, Germany is in danger of losing the connection to the two European leaders, France and Great Britain, when it comes to foreign investment. This is the result of an investigation by the auditing and consulting company EY (Ernst & Young), which was published in Stuttgart.

Foreign investors announced 841 projects in Germany last year, which means a decline of ten percent year-on-year. The European prime minister France, on the other hand, recorded 1,222 projects, which was a significant increase of 24 percent. The non-EU country Great Britain came to 993 investment projects, an increase of two percent, as EY reported.

Competitive, but too bureaucratic

“In the intra-European location competition, Germany seems to be losing out at the moment,” said Henrik Ahlers, Chairman of the EY Management Board. The British exit from the EU (Brexit), on the other hand, had only marginally reduced Britain’s attraction to foreign investors. Neighboring France has implemented important reforms in recent years and has earned a reputation as an attractive investment location.

“Germany is without a doubt a very strong and competitive location,” Ahlers said. He recalled the new plant of the electric car manufacturer Tesla in Grünheide, Brandenburg, and the chip factory in Magdeburg announced by Intel. However, Germany is said to have lengthy administrative and approval processes as well as comparatively high energy costs.

Shortage of skilled workers: luxury problem of full employment?

The shortage of skilled workers also plays a role. “In Germany, there is almost full employment in individual regions and sectors. If you want to gain a new foothold here, it is sometimes very difficult to find sufficiently qualified personnel,“said Ahlers. This scares off potential investors.

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