Foreign direct investment into Germany staged a 50% recovery in 2025, reaching approximately €86bn, reversing a sharp 32% contraction the previous year, according to an analysis by the German Economic Institute (IW) based on transaction data from the central bank Deutsche Bundesbank. The German FDI rebound 2025 was driven not simply by a broad-based recovery but by a decisive shift in where capital was coming from.
British investors fill the gap left by US withdrawal
The most dramatic change in the composition of inbound capital came from the United Kingdom. UK inflows surged 284% to €26bn, making British enterprises the single largest foreign investor group in Germany, accounting for 31% of total inbound FDI. That is a transformation in the bilateral investment relationship that would have seemed unlikely only a year ago, when US corporations held the dominant position.
American companies moved sharply in the opposite direction. US investment into Germany fell 44% to €11.8bn, cutting the US share of inbound capital from over 36% to approximately 14%. Samina Sultan, a researcher at the German Economic Institute, put it plainly: ‘While US companies are withdrawing from Germany, British investors in particular have filled the gap.’
The scale of that substitution is worth noting on its own terms. The UK added roughly €20bn in incremental inflows compared with the prior year, while the US withdrew a net €9bn or so. Between the two shifts, the rebalancing of Germany’s investor base was substantial and rapid.
European capital remains the foundation of German FDI
Beyond the UK surge, the broader European picture points to structural continuity. European Union member states deployed €43bn into Germany in 2025, a fall of 2.7% year on year but still representing more than half of all inbound foreign direct investment. Combined with UK allocations, European sources accounted for more than 80% of total direct investment into the German economy.
Sultan drew the geographic conclusion directly from the numbers: ‘These figures demonstrate that the closest and most reliable economic ties remain with our European neighbours.’ The concentration of capital from nearby markets, whether inside or outside the EU’s formal structures, underlines how integrated Germany’s investment base remains with the continent around it.
That integration has survived a period of considerable turbulence. Germany’s inbound FDI total fell 32% in 2024 before the German FDI rebound 2025 restored much of that lost ground. The volatility in annual flows, however, sits against a longer-term trend that looks more stable: the 2025 headline figure represents an 11% increase over the ten-year median recorded between 2015 and 2024, a signal of structural resilience in the country’s capacity to attract cross-border commercial and industrial capital.
Emerging markets show mixed momentum
Investment from beyond the Western bloc produced a mixed picture. Capital inflows from Saudi Arabia and Chile each increased by more than 40%, suggesting growing appetite from Gulf and Latin American investors. China’s contribution also rose, up 51% to €199m, though that figure represents just 0.2% of total inbound FDI, leaving China’s footprint in the German economy modest despite the headline growth rate.
The contrast between China’s percentage gain and its absolute weight in the overall total illustrates how far non-Western capital still sits from meaningful scale in the German market, at least as measured by direct investment flows.
The IW analysis, drawing on Deutsche Bundesbank data, will inform discussions among policymakers and businesses assessing where Germany’s external economic relationships are heading, particularly as the German government weighs industrial and trade policy in a shifting geopolitical environment. The ten-year median comparison suggests that despite recent turbulence, Germany’s appeal to foreign capital has not fundamentally weakened.
