Foreign Investment in Germany Jumps as UK Capital Surges, US Share Falls
Germany drew €86 billion in foreign investment in 2025, with British firms sharply increasing commitments while US companies reduced their share.
Foreign direct investment into Germany rose sharply in 2025, reaching €86 billion and marking a 50% increase from the previous year, according to the German Economic Institute (IW) in Cologne. The figures, published on Monday, August 31, point to a notable rebound in Europe’s largest economy after a weak 2024 and carry particular relevance for British and wider European business interests as capital flows within the region shift.
For UK-based companies and investors, the standout detail is the sharp increase in British investment. IW said investment from UK firms rose by 284% in 2025, reaching €26 billion. That gave British companies a 31% share of all foreign investment into Germany last year, a striking increase in importance at a time when American companies were committing much less capital.
The US remained an important investor, but its role diminished substantially. According to IW’s calculations, investment by American businesses in Germany fell by 44% in 2025 to €11.8 billion. As a result, the US share of Germany’s total foreign investment declined from 36% to 14%.
That shift in the composition of foreign capital is likely to be closely watched in London and across Europe. Germany remains a critical industrial and commercial partner for both British and EU firms, and the new figures suggest that, at least in 2025, European and especially British capital played a larger role in supporting investment into the German market than US money did.
European capital remains dominant
Despite the surge in British investment, the biggest overall share of foreign capital in Germany still came from other European Union member states. IW said investment from EU countries totalled €43 billion in 2025. That was down 2.7% from the previous year, but it still accounted for half of all foreign capital entering the country.
The pattern underlines Germany’s continued dependence on intra-European investment ties even as the national mix of investors changes. For businesses operating across the UK and EU, the figures reinforce Germany’s position as a central destination for regional capital allocation, supply-chain expansion and long-term corporate investment.
IW also reported rising investment from China, Chile and Saudi Arabia. Even so, those countries still play only a minor role in the overall volume of foreign investment into Germany.
“Direct investment flows differ from year to year. Their total can change because of individual large transactions,” IW experts said.
The institute also cautioned that investment data are often revised after the fact, either upward or downward. That warning is important for investors and analysts trying to draw broader conclusions from a single year’s jump. Large corporate deals can heavily influence annual totals, and the headline increase should therefore be read alongside the volatility inherent in direct investment statistics.
Even with that caveat, IW said the improvement was not merely a rebound from an unusually low base. Compared with the median level recorded between 2015 and 2024, foreign investment in Germany in 2025 was still 11% higher. That suggests a genuine strengthening in Germany’s ability to attract overseas capital, rather than only a technical recovery from the prior year’s slump.
The comparison matters because 2024 was particularly weak. IW said foreign investment had fallen by 32% that year. Against that backdrop, the 2025 increase appears especially strong. For UK and European executives, the data may be read as evidence that Germany retained its pull for international investors despite the previous year’s decline.
For British companies, the rise in investment could be interpreted as a sign of deepening commercial engagement with Germany at a time when cross-Channel business relationships remain strategically important. Germany’s large industrial base, consumer market and role within the EU single market continue to make it a natural focal point for UK firms seeking scale on the European mainland.
At the same time, the decline in the US share highlights a broader rebalancing in the origin of foreign capital. The figures do not explain the motives behind individual investment decisions, but they do show that in 2025 Britain became a much more prominent source of capital for Germany than in the previous year, while the US became less so.
That change is likely to be relevant for London-based market participants assessing European exposure, even though the IW data do not provide a direct reading on sterling or on immediate London market moves. What they do offer is a clearer picture of where corporate capital was coming from and how the balance among major investor countries shifted over the course of the year.
For policymakers and business leaders in both the UK and the EU, the message is straightforward. Germany attracted significantly more foreign investment in 2025, the EU remained the largest overall source of capital, and British firms emerged as one of the year’s most important growth drivers. In a European business environment shaped by uneven recovery and shifting international priorities, that makes the UK-Germany investment link one of the more closely watched developments in the latest data.
