The Numbers Don't Lie

Foreign investors announced 548 new projects in Germany in 2025. That's a 10% drop from 2024, according to an EY analysis reported by the German Press Agency.

This is the eighth consecutive annual decline. Not a blip. A trend.

EY has tracked this data since 2006. The last time the number was this low was 2009 — the depths of the global financial crisis. Germany isn't in a financial crisis right now. This is self-inflicted.

Germany Is Falling Behind Its Own Neighbors

France pulled in 852 foreign investment projects in 2025. The UK landed 730. Both countries beat Germany — and both posted steeper percentage declines than Germany did. That means Germany isn't just losing ground in bad times. It's structurally less attractive than countries that are also struggling.

Henrik Ahlers, head of EY Germany, didn't sugarcoat it: "Germany is falling behind, and other European locations are developing significantly better."

He specifically called out competitors that digitized government services, simplified tax codes, and cut red tape. Germany talked about doing those things. It didn't do them.

What's Killing Investment

Ahlers listed the problems plainly: high taxes, high labor costs, expensive energy, and paralyzing bureaucracy.

On energy: Germany's self-imposed dismantling of nuclear power — the result of a political decision, not an economic one — left it dependent on imported energy at premium prices. According to Tekedia, energy-intensive industries now see Germany as a high-uncertainty, low-competitiveness location compared to the United States or Eastern Europe.

On bureaucracy: Tekedia noted that Germany's layered federal-state governance structure slows permitting and project execution in capital-intensive industries where speed matters. Rule-of-law stability is NOT enough if it takes years to get a permit.

On reform: Ahlers was blunt — Germany's inability to reform has become known worldwide. That's a reputation problem on top of a structural problem.

Bankruptcies Are Exploding

The investment decline isn't happening in isolation. The Halle Institute for Economic Research reported that German corporate bankruptcies hit 4,573 in the first quarter of 2026 alone — the highest level since 2005 and above the rate seen during the 2009 financial crisis.

March 2026 saw bankruptcies 71% above the average for the same month between 2016 and 2019.

Volkswagen Is the Face of the Problem

Need a symbol? Look at Volkswagen. The company plans to cut roughly 50,000 jobs in Germany by 2030 after its net profit fell 44% in 2025 to €6.9 billion, according to Remix News.

While workers get pink slips, Volkswagen board members each secured €1.75 million in bonuses, per Remix News. That's a separate outrage — but the job cuts are the story that matters for Germany's working class.

And Volkswagen isn't alone. Reuters reported last August that 245,500 industrial jobs had been lost in Germany since 2019 — before COVID even hit.

What Mainstream Coverage Is Missing

Most English-language coverage of Germany's economic trouble frames this as a temporary cyclical problem — trade war headwinds, global slowdown, bad luck. That framing is wrong.

Eight consecutive years of declining foreign investment is NOT a trade war problem. Donald Trump wasn't president for eight straight years. This is a structural rot that predates recent tariff disputes.

The coverage also buries the energy policy angle. Germany's decision to phase out nuclear power while preaching climate virtue drove up energy costs for its own industrial base. That's a policy choice with an economic consequence — and most mainstream outlets are reluctant to say so plainly.

Also missing: the comparison to France and the UK. Both beat Germany on foreign investment while facing the same global headwinds. That comparison demolishes the "it's just the global environment" excuse.

What This Means for Regular People

If you're a German worker in manufacturing, chemicals, or auto — your employer is under sustained pressure and has been for years. The safety net your parents relied on is getting more expensive to fund with a shrinking tax base.

If you're an American watching this: this is what happens when governments prioritize ideological energy policy over economic reality, let bureaucracy metastasize for decades, and mistake talking about reform for doing it.

Germany had one of the strongest industrial reputations in the world. According to EY's Henrik Ahlers, "little remains of its image as a strong, high-quality location and an economic rock in turbulent times."

That's the result of choices made by people who thought they knew better than the market.

They didn't.