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US investors are essential for Germany as a business location. It is therefore important to find out their views on their own business situation and on Germany as a business location. What is going well, where do they see new opportunities, where do they see challenges - and what are the forecasts? We asked 100 Chief Financial Officers (CFOs) of the largest German subsidiaries of American corporations this question as part of our overall study "Business Destination Germany 2024". The core finding of the special survey with a US focus: investors remain fond of the location and see opportunities for themselves in Germany's upcoming transformation tasks. However, in view of the sustained downward trend in all the location factors surveyed, there is a need for action on the part of German policymakers.

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Business Destination Germany 2024 - the perspective of US-investors

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Germany competes internationally as a business location and must constantly develop and reform. 49 per cent of the US companies surveyed see business opportunities for themselves. Germany's major transformation tasks are also opening up profitable new business areas for investors from the United States: 49 per cent of the US companies surveyed say that their companies intend to make new investments in the next five years as a result of the accelerated changes driven by megatrends. Among others, the focus is on the energy sector, healthcare and cross-sector digitalisation. 22 per cent also state that their company intends to expand its overall presence in Germany. Only five per cent are planning a reduction.

However, it is also clear that Germany's attractiveness values are falling significantly. The KPMG Location Index, which measures 23 location factors, has a value of just +1.2 on a scale of +10 (top of the EU comparison) to -10 (bottom of the EU comparison). Since the first survey in 2017, the value has been falling continuously: in 2017 it was still at 3.0, in 2019 at 2.8 and in 2021 at 2.5. This means that it has halved since our last survey. The respondents' scepticism is a possible indication that Europe's third-largest economy is living off the land and has not yet implemented reforms to a sufficient extent.

In the webcast, Warren Marine, Head of Country Practice USA at KPMG in Germany, presents the details of the study. Following that, Andreas Glunz, Head of International Business at KPMG in Germany, discusses with him and Simone Menne, President of the American Chamber of Commerce in Germany, the current view of the US economy on Germany.

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"The positive news is that US companies are still focussing on Germany. The large sales market, the central location and the strong industrial base remain attractive. At the same time, however, we are seeing that investors are increasingly holding back due to the deteriorating location conditions. They cite the faltering digitalisation, for example."

Results at a glance

  • Assessment of location factors:
    86 per cent of the company representatives surveyed say that Germany's location in the EU is one of the best five locations in terms of logistics or even the leader among European locations. 73 per cent consider Germany to be a leading location in terms of the standard of living factor, and 71 per cent in terms of public safety.

    The status quo was rated worst in terms of the digitalisation of public administration and the country's digital infrastructure: 54% and 41% of respondents respectively ranked Germany among the worst five locations in the EU in this respect.
  • Investment opportunities and investment hurdles:
    Maintaining and nurturing the core business (90 per cent) and participating in the European sales market are the main reasons for US involvement in Germany, according to the survey. 49 per cent of respondents also stated that Germany's extensive and far-reaching transformation tasks are opening up new business options.

    By contrast, the biggest obstacles to investment are excessive bureaucracy (cited by 59%), uncertainty regarding energy security and cost trends (50%) and insufficient digitalisation of public administration (42%).

The survey results on the economic outlook of US investors are also mixed. On the one hand, they can be optimistic: For the current year 2024, 35 per cent of respondents expect their own business situation to improve - and 65 per cent even expect an improvement by 2029. 59 per cent of respondents currently consider their own business situation to be very good or good, while only 12 per cent consider it to be very bad or bad. On the other hand, it is necessary to look at trend lines for an overall perspective: in 2021, for example, 73 per cent still rated their current business situation as very good or good instead of 59 per cent. This represents a decline of 14 percentage points compared to the most recent comparative figure. The overall situation of respondents has therefore deteriorated significantly.