International investors benefit greatly from Germany’s economic strength as well as political stability, says Managing Partner Andreas Glunz
Mr Glunz, what does the coronavirus crisis mean to Germany as an investment location?
Andreas Glunz: The pandemic and, above all, the way individual countries handle it will change how investors see things. Germany was already thought of as an anchor of stability, as has repeatedly been shown in our investment barometer “Business Destination Germany 2020” in recent years. But, as a location, Germany is emerging from the crisis even stronger than before.
What exactly is making Germany more appealing?
Andreas Glunz: Firstly, the direct economic impact is comparatively minor in Germany. The pandemic was caught early and at a low level, which allowed a return to relative normalcy quickly, even if that does mean a new normal. There are various reasons for this, but the fact is that few countries have been affected by the pandemic as lightly. Nevertheless, Germany is also going to be facing a wave of insolvency.
Secondly, the crisis is helping politics to fix Germany's structural weak points. Just over half a year ago, a balanced budget was set in stone. People were rightly complaining that not enough was being invested in the future, not to mention digitalisation. Now, incredible amounts of money are being made available - not just in Germany, but at EU level as well. We're talking about hundreds of billions of euro, much of which will be going towards future projects such as digitalisation and renewable energies.
In addition, the loss of jobs that the crisis has unfortunately also meant is easing the labour shortage. This has been a key obstacle to companies' growth in recent times.
Specifically, how can investors benefit from this?
Andreas Glunz: The stimulus measures will be fleshed out in the coming months and project contracts will be awarded. Companies, which of course means international companies as well, will then be able to bid for contracts. Anyone who wants to be a part of that should be making their preparations now and possibly expanding their presence in Germany.
And any company that depends on clean energy, modern infrastructure and digital management will benefit indirectly, too.
Do you expect to see growth in foreign investment?
Andreas Glunz: Absolutely. Germany was already the preferred place in Europe for foreign investors. 49% of the international companies with offices in Germany use them as their European headquarters, and 40% even use Germany as their hub for activities outside Europe.
A lot of companies that haven't considered Germany before will be doing so now. The times are becoming less certain, and the push for the geographical diversification of corporate structures will bring more production to Europe. Germany will benefit enormously from this, especially with the UK becoming significantly less attractive as an alternative on account of the approaching Brexit date. We are already seeing a growing number of companies ask whether their presence in the UK is really the foothold they need to serve continental Europe. Our position in Europe, our economic strength, innovation and political stability are all things for which investors have long prized Germany. Major infrastructural deficiencies are now being taken care of as well. I am confident that this push will bring in investors.
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