BERLIN, June 4 (Xinhua) -- The number of foreign direct investment (FDI) projects in Germany declined by 13 percent year-on-year, relegating the country from second to third place behind France, the first decline since 2005, according to a survey published by EY here on Tuesday.
According to the survey, the number of FDI projects in Germany decreased to only 973 in 2018 from 1,124 the previous year.
"The fact that foreign investment in Germany is falling is a warning signal -- Germany is no longer the growth engine of the European economy," said Hubert Barth, CEO of EY in Germany, on Tuesday.
Despite the looming Brexit, foreign companies continued to focus on the United Kingdom (UK) as a business location. With a total of 1,054 foreign investment projects in 2018, the UK once again took first place in EY's European investment ranking.
While U.S. companies continued to invest in Germany, even increasing their investments by 3 percent, the FDI flow from other important nations was declining, according to the survey.
British and Chinese companies carried out 12 percent fewer projects in Germany than in the previous year, and investments from Switzerland fell by 42 percent.
German companies, on the other hand, increased their investment in other European countries by 5 percent year-on-year to a total of 695 projects, setting an all-time record.
German companies continue to play an "important role" in the European economy and the European labor market. Last year, German companies created more than 57,000 new jobs through their investment projects, only investments by U.S. companies led to more jobs.
"With economic growth of 1.4 percent last year, Germany only ranked 24th among the 28 EU member states. And the outlook for 2019 is anything but rosy. We urgently need positive momentum and new growth impulses," Barth said.
According to the survey, foreign companies operating in Germany are increasingly critical of the country's policies. Negative valuations of Germany as a business location have increased from 22 percent to 37 percent, while only 11 percent were still positive without any reservations.
Although investors still valued Germany's transport infrastructure, the stability of the political and legal environment and the qualification level of its workforce, most of them criticized the flexibility of labor law, corporate taxation and high labor costs.
"Political stability and predictability are a great asset for a location," commented Bernhard Lorentz, partner at EY and head of government & public sector for Germany, Switzerland and Austria.
However, "a competitive tax system, a mood of economic and political optimism and openness to new technologies are also important factors. And Germany has a lot of catching up to do in this respect," he said.
