“The World Is Losing Trust”: Foreign Investment In Germany Plunges To Lowest Level Since 2009

Key Takeaways:

• Foreign investment in Germany sank to its lowest level since 2009.
• Only 548 new projects were announced for 2025, a 10% drop from the prior year.
• EY attributes the decline to high taxes, expensive energy, and administrative red tape.
• Company bankruptcies surged, surpassing figures seen during the 2009 crisis.
• Volkswagen and other major industrial players have faced serious setbacks, spurring further concern about Germany’s economic standing.

Germany’s Looming Investment Crunch

Foreign investment in Germany has fallen to its lowest level since 2009, marking the eighth consecutive annual decline. According to an analysis by the auditing and consulting firm EY, foreign investors proposed just 548 new projects in 2025—a 10 percent decrease from the preceding year. “Germany is falling behind, and other European locations are developing significantly better,” warned Henrik Ahlers, Head of EY in Germany.

A Warning Sign from EY

Ahlers labeled the downward trend as a “warning sign for Germany as a business location,” pointing out that while other countries have digitized government services, adjusted tax frameworks, and supported commercial activity, Germany has struggled with “high taxes, high labor costs, expensive energy, and at the same time, paralyzing bureaucracy.” Ahlers underscored that Germany’s perceived failure to reform has taken a toll on its image as a once-mighty economic powerhouse.

Bankruptcy Spike and Economic Pressures

These sobering statistics coincide with escalating bankruptcy rates. The Halle Institute for Economic Research reports 4,573 company bankruptcies among partnerships and corporations in the first quarter of the year, a figure unseen since 2005. This surge—71 percent above March’s average between 2016 and 2019—indicates the mounting difficulties businesses face in Europe’s largest economy.

Strains on the Industrial Sector

Germany’s industrial sector, often regarded as the backbone of the country’s economy, also faces headwinds. A Reuters report revealed that 245,500 industrial jobs have been lost since 2019, illustrating the toll on manufacturing and related fields. Volkswagen, once a leading symbol of German industrial might, plans to cut around 50,000 jobs by 2030 following a 44 percent drop in net profit to €6.9 billion in 2025. The company cited disruptions stemming from U.S. import tariffs, restructuring costs, and profitability woes at Porsche.

Europe’s Shifting Foreign Investment Landscape

On a broader scale, EY found that foreign investors announced 5,026 new projects across Europe last year, a 7 percent decline. While France held onto first place with 852 projects and the United Kingdom followed with 730, Germany slipped to third. Politicians like AfD co-leader Alice Weidel have voiced alarm over Germany’s competitive disadvantage, observing that “the world is losing trust” in the country as an attractive investment destination.

Looking Ahead

As Germany grapples with these headwinds, critics argue that bureaucracy, taxation structures, and energy costs must be addressed for the nation to regain its footing. Without meaningful reforms, Germany risks ceding ground to its more adaptable European neighbors—confirming the message EY has underscored: the country’s reputation as a booming industrial hub is now at stake.