UK investment drives FDI into Germany to record high after Brexit

Germany received a record level of foreign direct investment last year, official figures showed, with a boost from a surge in UK companies setting up operations in Europe’s biggest economy in a bid to maintain a post-Brexit status quo in the European Union.

FDI in Germany was €25.3bn last year, up 261 per cent from €7bn in 2021. The largest source of investment was the US, with 279 projects, followed by Switzerland in second and the UK in third. A total of 170 FDI projects to start in the UK in 2021, up 21 per cent.

“For British companies, gaining a foothold in the EU after Brexit is particularly important,” said Robert Hermann, chief executive of Germany Trade & Invest (GTAI). The Economic Development Agency said almost a third of the projects announced by UK companies were in financial services and 21 per cent in IT.

One of the UK’s largest investments was made by Fraser Group, owner of Sports Direct and other high-street brands, which announced in April last year that it would spend €300 million on a new distribution center at Bitburg Airport in western Germany. is spending what will become of it. European Headquarters.

UK-based Mura Technology announced last year that it chemical recycling plant in the eastern city of Bohlen which will convert 120,000 tonnes of plastic waste into oil per year. Proton Motor Power Systems also said it is expanding its Puchheim plant in southern Germany, which produces fuel cell stacks and hydrogen fuel cell engines.

and THEMPC, a promotions and branding company, set up an operations center in Munich. This will allow the company to produce and distribute printed goods and bespoke packaging inside the EU without the need for customers to pay additional duties and taxes.

GTAI officials said UK companies setting up shop in Germany were attracted by the country’s traditional strengths in cars, manufacturing and logistics.

While FDI in Germany peaked last year, officials expect the total amount to decline this year, as President Joe Biden’s inflation reduction act attracts investment in green technologies from Europe to the US.

“When it comes to new convictions, the numbers are falling,” Herman said. “The trend we’re seeing is that there will be fewer of them.”

He identified the IRA as a possible factor. “We believe this will have an impact on investment in Europe and Germany,” he said.

Germany has become a magnet for semiconductor and battery companies, and a beneficiary of EU plans to increase the bloc’s self-sufficiency in key technologies and its resilience to potential disruptions to Asian supply chains.

Most of the increase in FDI was due to plans by US chipmaker Intel to build a €17bn factory in the East German city of Magdeburg, and also by a €4.5bn investment by Swedish start-up Northvolt in a new battery factory in the north. State of Schleswig-Holstein.

But even without Intel’s contribution, FDI would have stood at €8.3bn – higher than the 2021 figure.

Hermann said investors are attracted to Germany because of its “market size, its secure legal framework, highly qualified workforce, infrastructure and R&D environment”. By project type, 35 percent of the investment was in sales, marketing and support, 25 percent in business services, and 15 percent in manufacturing and R&D.

GTAI figures are a lagging indicator. The steep rise in energy prices last year due to Russia’s war in Ukraine has made Germany a far less attractive place to do business than it was before the invasion. While gas prices are now near pre-war levels, many companies are still looking elsewhere, especially in the U.S. The IRA provides $369bn in subsidies and tax credits for clean energy technologies.

Harman said energy prices played a role for large international investors, but other factors were more important. “Not every project is energy intensive,” he said. “Many are driven by personnel costs and (proximity to) critical R&D partners, suppliers and customers.”

The agency noted that incoming investment from China was holding back, with only 141 projects announced last year – the lowest figure in eight years. Despite the decline, China was the fourth largest foreign investor.

Some experts attribute the easing to tighter restrictions on M&A activity by Chinese companies in Germany. But Hermann attributed the decline to the aftermath of the COVID-19 pandemic, which made it difficult for Chinese officials to travel to Germany.

Germany received a record level of foreign direct investment last year, official figures showed, with a boost from a surge in UK companies setting up operations in Europe’s biggest economy in a bid to maintain a post-Brexit status quo in the European Union.

FDI in Germany was €25.3bn last year, up 261 per cent from €7bn in 2021. The largest source of investment was the US, with 279 projects, followed by Switzerland in second and the UK in third. A total of 170 FDI projects to start in the UK in 2021, up 21 per cent.

“For British companies, gaining a foothold in the EU after Brexit is particularly important,” said Robert Hermann, chief executive of Germany Trade & Invest (GTAI). The Economic Development Agency said almost a third of the projects announced by UK companies were in financial services and 21 per cent in IT.

One of the UK’s largest investments was made by Fraser Group, owner of Sports Direct and other high-street brands, which announced in April last year that it would spend €300 million on a new distribution center at Bitburg Airport in western Germany. is spending what will become of it. European Headquarters.

UK-based Mura Technology announced last year that it chemical recycling plant in the eastern city of Bohlen which will convert 120,000 tonnes of plastic waste into oil per year. Proton Motor Power Systems also said it is expanding its Puchheim plant in southern Germany, which produces fuel cell stacks and hydrogen fuel cell engines.

and THEMPC, a promotions and branding company, set up an operations center in Munich. This will allow the company to produce and distribute printed goods and bespoke packaging inside the EU without the need for customers to pay additional duties and taxes.

GTAI officials said UK companies setting up shop in Germany were attracted by the country’s traditional strengths in cars, manufacturing and logistics.

While FDI in Germany peaked last year, officials expect the total amount to decline this year, as President Joe Biden’s inflation reduction act attracts investment in green technologies from Europe to the US.

“When it comes to new convictions, the numbers are falling,” Herman said. “The trend we’re seeing is that there will be fewer of them.”

He identified the IRA as a possible factor. “We believe this will have an impact on investment in Europe and Germany,” he said.

Germany has become a magnet for semiconductor and battery companies, and a beneficiary of EU plans to increase the bloc’s self-sufficiency in key technologies and its resilience to potential disruptions to Asian supply chains.

Most of the increase in FDI was due to plans by US chipmaker Intel to build a €17bn factory in the East German city of Magdeburg, and also by a €4.5bn investment by Swedish start-up Northvolt in a new battery factory in the north. State of Schleswig-Holstein.

But even without Intel’s contribution, FDI would have stood at €8.3bn – higher than the 2021 figure.

Hermann said investors are attracted to Germany because of its “market size, its secure legal framework, highly qualified workforce, infrastructure and R&D environment”. By project type, 35 percent of the investment was in sales, marketing and support, 25 percent in business services, and 15 percent in manufacturing and R&D.

GTAI figures are a lagging indicator. The steep rise in energy prices last year due to Russia’s war in Ukraine has made Germany a far less attractive place to do business than it was before the invasion. While gas prices are now near pre-war levels, many companies are still looking elsewhere, especially in the U.S. The IRA provides $369bn in subsidies and tax credits for clean energy technologies.

Harman said energy prices played a role for large international investors, but other factors were more important. “Not every project is energy intensive,” he said. “Many are driven by personnel costs and (proximity to) critical R&D partners, suppliers and customers.”

The agency noted that incoming investment from China was holding back, with only 141 projects announced last year – the lowest figure in eight years. Despite the decline, China was the fourth largest foreign investor.

Some experts attribute the easing to tighter restrictions on M&A activity by Chinese companies in Germany. But Hermann attributed the decline to the aftermath of the COVID-19 pandemic, which made it difficult for Chinese officials to travel to Germany.