Germany as a location: Dangers and opportunities in international competition!

Germany as a location: Dangers and opportunities in international competition!

The attractiveness of Germany as a location is now heavily criticized. Business associations and experts are concerned about the development, which has become increasingly negative in recent years. A current survey by Ifo Institute represents Germany as a location in the middle of Europe. Almost 80 percent of those surveyed are of the opinion that the attractiveness of the location has noticeably decreased over the last ten years.

Among the experts surveyed, Germany received 61.3 out of 100 possible points, putting it behind countries such as Austria (72.4 points) and Switzerland (72.6 points). When it comes to foreign companies, the rating is even worse: only 49.6 points were achieved here, which casts additional critical light on the location's location. n-tv reports that 48 percent of those surveyed fear further deterioration in the next ten years.

Strengths and weaknesses at a glance

The survey by the Ifo Institute shows a mixed picture. The strengths of Germany as a location primarily include economic stability and potential (14 percent), followed by the availability of skilled workers (10 percent), stable supply chains (10 percent) and innovative strength (8 percent). The geographical location is also perceived as advantageous (7 percent).

• Stärken:
  • Wirtschaftliche Stabilität und Potenzial (14%)
  • Fachkräfte (10%)
  • Lieferketten (10%)
  • Innovationskraft (8%)
  • Vorteilhafte geografische Lage (7%)

On the other hand, the location's weaknesses are becoming increasingly clear. The most common points of criticism include high operating and wage costs (14 percent), followed by linguistic and cultural differences (9 percent), over-regulation (8 percent) and the high tax and levy burden (7 percent).

• Schwächen:
  • Hohe Betriebs- und Lohnkosten (14%)
  • Sprachliche und kulturelle Unterschiede (9%)
  • Überregulierung (8%)
  • Hohe Steuer- und Abgabenlast (7%)

The international competition

An international comparison shows that Germany is falling far behind other countries. According to that Statista In the 2023 World Competitiveness Ranking, Germany is in 22nd place and has lost significant ground compared to the previous year (15th place). Particular challenges lie in the high level of bureaucracy, expensive labor costs and the shortage of skilled workers, which affects 42.8 percent of industrial companies.

The efficiency of politics is rated 27th out of 64, which means a decrease of six places compared to the previous year. The bureaucracy cost index shows that the high costs of bureaucratic requirements have increased again in 2022, further undermining the location's competitiveness. These factors are also leading to net outflows from Germany of around 94.1 billion euros in 2023, a clear sign of falling confidence.

The federal government's economic and location policy receives an average school grade of 4.8 from companies, which represents a clear call for improvement. Despite the positive aspects such as well-trained specialists and a solid infrastructure, it remains to be seen whether Germany can sustainably increase its competitiveness in the global market.