A new KPMG survey reveals a sharp erosion of confidence among global investors in Germany’s appeal as an investment destination. The latest edition of the firm’s biennial “Business Destination Germany” study shows the country’s location index plunging to a record low of just +0.2 points—down from +3.1 in 2017 and +1.2 in 2023. This near-neutral score places Germany barely above the European Union average, with 14 of 24 key location factors rated worse than two years ago and 11 now trailing the EU benchmark.
KPMG pointed out that the downturn is starkest in how chief financial officers view their German operations.
More than half (52 percent) now describe the economic climate for their subsidiaries as “poor” or “very poor”—nearly triple the 18 percent recorded in 2023. Investment plans mirror this pessimism.
Almost one-quarter of respondents (23 percent) intend to scale back spending in Germany, up from 11 percent previously, while 46 percent expect to hold steady.
Only 31 percent plan increases, and most of those anticipate growth of less than 10 percent.
Cuts are especially severe among investors from Southeast Asia (71 percent) and Central and Eastern Europe (47 percent), with many reductions exceeding 30 percent.
Energy costs, bureaucracy, and digital infrastructure emerge as the clearest weaknesses.
Roughly 70 percent of CFOs rank Germany among Europe’s five least competitive nations in each category.
Energy prices are viewed as the single worst factor by 43 percent of participants—the first time this issue was measured separately—exacerbated by global tensions and rising demand from automation.
Bureaucratic hurdles have deteriorated fastest: 70 percent see Germany as overly regulated, with 29 percent placing it at the very bottom of the EU.
Digital infrastructure fares little better, while physical infrastructure has slipped dramatically—only 29 percent now view it as top-tier, compared with 77 percent in 2017.
Taxes and immigration policy also draw criticism, with complexity and restrictions cited as major drags. Yet Germany retains notable strengths.
Sixty percent of international firms still use the country as their European headquarters, and 63 percent coordinate non-European activities from here.
Public safety, political stability, market size, research capabilities, and openness to innovation continue to earn high marks. Even so, perceptions of quality of life have softened.
KPMG Executive Partner Andreas Glunz described the results as a “tipping point.”
He warned that eight years of gradual decline in competitiveness—spanning energy, regulation, digitalization, taxes, infrastructure, and skilled labor—have turned Germany from a preferred location into one under close scrutiny.
Short-term electricity price relief, he noted, is insufficient amid fresh geopolitical pressures and surging energy needs from digital transformation.
Without swift implementation of promised reforms, Glunz cautioned, companies will redirect capital, jobs, and value creation elsewhere, threatening long-term growth and tax revenues.
The survey, conducted in November 2025 among 400 CFOs from the eight largest investor nations plus other inbound players, underscores both risks and opportunities.
About one in five executives highlighted the federal government’s reform agenda and major transformation priorities—energy transition, digitalization, demographics, and defense—as reasons for continued commitment.
Germany remains a cornerstone for many global corporations, but patience is wearing thin.
Whether recent policy pledges can reverse the structural slide or if deindustrialization accelerates will shape the country’s economic trajectory in the years ahead. KPMG has concluded that policymakers and business leaders now face a narrow window to restore competitiveness before investment decisions harden.
