The Ukraine war and the labor shortage are exacerbating Germany’s problems with attracting investors. Family businesses warn of a dramatic development.

In terms of attractiveness as a business location, Germany has fallen to the last places in the international country ranking of the Center for European Economic Research (ZEW) due to the problems of the Ukraine war.

In the ranking of the best location conditions in the ZEW study, the Federal Republic slipped four places to 18th place among 21 industrialized countries, as reported by the “Augsburger Allgemeine” from the study available to it.

In addition to bureaucracy, a high tax burden and a slow willingness to innovate, high energy costs and a lack of workers now also worsened the quality of the location. The “findings on Germany’s position offer considerable cause for concern,” write the researchers working with ZEW economist Friedrich Heimann.

The situation is sobering. According to the study, entrepreneurs have the best conditions in the USA, followed by Canada and Sweden. Switzerland comes in fourth place, the strongest climber is Poland. Only Hungary, Spain and Italy are behind Germany in the index. The study was again commissioned by the family companies.

“Germany as an industrial location has lost dramatically in quality,” said Rainer Kirchdörfer, head of the family business foundation of the “Augsburger Allgemeine”. The high energy prices should now be an incentive to become stronger in other fields. “In an international comparison in the last places – that’s not the field in which we belong,” said Kirchdörfer. He demands to listen to business demands. These include streamlined, accelerated approval processes for factories, roads, rails and wind farms. Also, intensive early childhood education for boys and girls and lower taxes.

Low energy prices, a lean government and favorable financing conditions speak in favor of the frontrunner USA. From a business perspective, Sweden attracts with its tax system and cheap energy prices. Switzerland scores with its well-functioning state apparatus and access to capital. Only Hungary, Spain and Italy are behind Germany in the index. The ZEW has been determining the ranking of location quality since 2006. All in all, Germany has lost six places in terms of competitiveness after a temporary rise as a result of the Hartz reforms. The biggest climber in the study is Poland.