Suche
Mein Konto
Merz is fighting for foreign investment: Germany in crisis mode!
Chancellor Merz promotes foreign investments in Germany. Discussion about economic attractiveness and infrastructure.
Merz is fighting for foreign investment: Germany in crisis mode!
Today, Chancellor Merz met with leading representatives of international companies in the Chancellery to discuss the attractiveness of Germany as a business and financial location. In an exciting exchange, Merz presented the black-red government's plans, which include, among other things, the establishment of a “special infrastructure fund”. It was also about the urgently needed private investments, because Germany experienced a noticeable decline in foreign direct investments last year, as Deutschlandfunk reports.
Industry in Germany is under massive pressure, which is reflected in the declining international capital flows. For 2024 it is forecast that less than a third of the direct investments from 2020 will flow to Germany. Nevertheless, the stock of foreign capital invested in this country has increased, despite falling direct investments. This makes it clear that the attractiveness of the location has decreased, as can be read on the vfa website. Merz is therefore planning another meeting with German company bosses on July 21st to discuss a necessary investment boost.
Challenges for Germany
The reasons for the decline in direct investment are varied and could be linked to high energy prices and competition with other countries. Germany and Europe must demonstrate their international competitiveness in promising sectors. The influence of international players such as the USA and China is becoming increasingly noticeable. The USA has created investment incentives through the Inflation Reduction Act (IRA), which is putting additional pressure on the investment climate in Europe, making Germany less attractive.
Interestingly, foreign investors have cumulatively increased their investment capital in Germany by 163 billion euros from the end of 2019 to June 2024. However, the majority of these investments come from third countries outside the euro area, with the most important countries of origin being the USA, the Netherlands and the United Kingdom, such as the [Bundesbank]. However, it is clear that direct investment inflows have declined significantly since 2022.
Enliven the future of the location
In order to overcome the challenges, the new federal government is calling for necessary reforms to strengthen the location. Measures such as investments in modern facilities and the acceleration of research and innovation processes are on the agenda. Tax incentives, such as increasing the research allowance and new special funds to improve public infrastructure, should also help to make the framework conditions more attractive for international skilled workers.
The upcoming discussions in the coming weeks are therefore of central importance. Merz will meet with important business representatives to think about common strategies and improve the framework conditions for investors. It remains to be seen whether these measures will be enough to reposition Germany as an attractive location for international direct investment.