Tesla in Brandenburg, Intel in Magdeburg: Germany is an attractive location for foreign corporations. Nevertheless, others in Europe are still ahead – why is that?

According to a new study, Germany is in danger of falling behind the two European frontrunners, France and Great Britain, when it comes to foreign investments.

This is the result of a study by the auditing and consulting company EY (Ernst

Foreign investors announced 841 projects in Germany last year, which means a year-on-year decrease of ten percent. The European leader France, on the other hand, booked 1222 projects, which was a significant increase of 24 percent. The non-EU country Great Britain had 993 investment projects, an increase of two percent, as reported by EY.

“In the intra-European location competition, Germany currently seems to be at a disadvantage,” said Henrik Ahlers, CEO of EY. The British exit from the EU (Brexit), on the other hand, only marginally reduced Great Britain’s appeal to foreign investors. Neighboring France has implemented important reforms in recent years and has gained a reputation as an attractive investment location.

Too sluggish administration?

“Germany is undoubtedly a very strong and competitive location,” said Ahlers. 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 and comparatively high energy costs.

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 foothold here, it is sometimes very difficult to find sufficiently qualified staff,” said Ahlers. That deters potential investors.