Germany's dwindling attractiveness for investors

Investments in Germany's dwindling attractiveness as a location As of: October 20, 2026 • 2:23 p.m

Germany has been becoming less and less attractive for international corporations for years. They avoid the location entirely or halve planned investments, such as the pharmaceutical company Eli Lilly in Alzey. The consequences are serious.

It's still a mega project. The pharmaceutical company Eli Lilly is building a huge factory in Alzey in Rhineland-Palatinate. But instead of two billion, only one billion will be invested, and instead of around 1,000 jobs, there will probably only be around 500.

At the beginning of June, the company halved its investment amount. The group cited the austerity measures in the healthcare system that the federal government had just decided on and poorer general conditions as reasons.

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“I was also surprised by the cutback plan,” says Steffen Jung. He is the mayor of Alzey. Jung and the city had been preparing for the mega-investment for more than two and a half years - planning new roads, apartments and daycare centers. “Nevertheless, it remains an outstanding settlement for Alzey and the entire region,” emphasizes Jung.

But: For the mayor, the massive cut is a fundamental problem that goes far beyond Alzey. "I also see Lilly Germany's decision as a wake-up call to the federal government. It is a warning signal. It is now the federal government's job to start talking to companies and make Germany attractive again for appropriate settlements."

"I was also surprised by the cutback plan" - the mayor of Alzey had expected significantly higher investments.

Alzey is not an isolated case. In other regions in Rhineland-Palatinate, businesses are also investing less and less in the location. The chemical company BASF from Ludwigshafen has been relocating parts of its production to China for years. There was more bad news this year: The pharmaceutical company Boehringer Ingelheim announced that it would completely cancel its planned investments in Germany amounting to 900 million euros. The funds now go primarily to the USA and Asia.

And a planned battery factory in Kaiserslautern will no longer be built. The battery manufacturer Automotive Cells Company (ACC) gave up the billion-dollar project. The main reason is the weak sales of electric cars in Europe.

Companies demand better framework conditions for investments in Germany Axel John, SWR, tagesschau, Das Erste, October 20, 2026 • 8:00 p.m. Medium-sized businesses are also suffering Small and medium-sized companies are also affected by the development - like the mechanical engineering company Minitec near Kaiserslautern. The company with its 270 employees manufactures special systems. Business customers include the automotive, food and construction industries.

“The current situation is challenging. We are doing everything we can to keep our sales stable,” says Tobias Doll, one of the three managing directors. The need is actually great. "From many conversations with our customers, we get the feedback that they would very much like to invest. But under the current conditions they don't do that because in the end it doesn't pay off."

This also applies to the company itself. Next to the factory, another hall is planned for 15 million euros. There are also new jobs, says Doll. But this investment project is canceled for the time being. “If the general conditions change and we can plan more easily, then we will also invest in a hall like this.”

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International investors give Germany a wide berth. This is also evident from several current studies. A current study by Allianz Research shows how great the need for investment is. Since 2019, Germany has built up an investment gap of up to 730 billion euros compared to the USA. In the rest of the Eurozone, however, investments increased by 6.7 percent and in the USA by as much as 20.2 percent. Public spending cannot close this gap, the paper says. The mobilization of private capital is crucial.

A current study by the Kreditanstalt für Wiederaufbau (KfW) warns: 92 percent of companies see a fundamental need for investment - for example in digitalization, infrastructure and modern systems. Larger medium-sized companies with a workforce of at least 50 employees in particular are holding back. The main reasons that are repeatedly cited are high energy costs, too much bureaucracy and high taxes and fees.

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Looking at investments in Germany in recent years, economic expert Daniel Stelter draws a bleak conclusion: "Companies in Germany have been net savers for over 20 years. They invest less than their profits. This is a dramatic vote of no confidence for the location, or as I would say, an investment strike," said Stelter.

He refers to another study by the management consultancy McKinsey, according to which net investments in Germany have fallen to almost zero percent of gross domestic product. Values ​​of two to four percent are common.

"The result: the capital stock of the economy, i.e. the means of production in the economy, is deteriorating. This will mean less progress in productivity, but we urgently need it in view of demographic developments and distribution conflicts." Stelter doesn't think much of the Berlin summit: "If you want to be attractive for investments, you should concentrate on the framework conditions that will primarily benefit those who are already there. The international investors will then come on their own."

In Alzey, Mayor Jung has not yet given up hope that the pharmaceutical company Eli Lilly will still make its originally planned investments in the long term.

"The Lilly construction project is currently being implemented as a whole. The infrastructure is then in place. If the general conditions improve in the future, the plant can be ramped up and the full number of jobs will be created."

This topic in the program: The First | daily topics | Oct 19, 2026 | 10:15 p.m