Germany as a Business Location after the Grand Coalition: An Assessment Using the IW Business Location Index

To ensure the necessary investments are made, the country will have to offer attractive investment conditions for companies that compete on international markets. Germany currently compares well with other countries as a business location: the latest version of the IW Business Location Index ranks it 4th in the world. However, this relatively good position is not reflected in all the location factors included in the Index, and there are distinct drawbacks to investing in Germany. These are to be found particularly in costs, with not only labour and energy costs but also the tax burden being especially high. Companies in Germany also have to contend with a significantly inferior digital infrastructure and considerable red tape. Since 2013, when Germany’s two main parties formed the current government, the country’s existing weaknesses as a business location have become even more pronounced. This lack of progress, combined with significant improvements in other countries, has left Germany falling further behind and is reducing the chances of future growth. After September’s general election, the next legislative period must see location policy given higher priority. Germany needs improved investment conditions so that industry can be regenerated and secure the jobs of the future