Post by Ramon Sieveking

Germany from the outside: Are we comparing ourselves with the wrong benchmark? Germany faces serious challenges. Weak growth, high energy costs, bureaucracy, slow approval procedures and an ever-growing body of regulation are real concerns. Many of these rules pursue important societal objectives. But together they also influence one decisive question: Where will companies invest? Capital, talent and entrepreneurial energy are finite. Every location competes for them. What I find interesting is that Germany often looks different depending on who is doing the comparison. Domestically, we tend to compare today’s Germany with the Germany of fifteen years ago. Against that benchmark, disappointment is understandable. International investors compare Germany with the realistic alternatives around the world. Where else do they find a large European market, reliable institutions, strong intellectual property protection, outstanding engineers, world-class suppliers and decades of industrial expertise? That comparison leads to a more balanced conclusion. Foreign observers are often highly critical of Germany’s bureaucracy, energy policy and pace of reform. Yet they also continue to value Germany’s industrial base and institutional strengths. The investment data tell the same story: Germany has lost momentum, but it remains one of Europe’s leading investment destinations. Perhaps our public debate could benefit from the same perspective. German media rightly focus on problems and accountability. But we sometimes lose sight of the strengths that international observers still see: the Mittelstand, engineering excellence, strong institutions and an industrial ecosystem that took generations to build. None of this argues for complacency. Quite the opposite. These advantages are not permanent. If competitiveness continues to erode, investment will increasingly go elsewhere. But neither should we fall into the opposite trap of believing that Germany’s future is already decided. Looking at Germany through the eyes of international investors does not make our problems disappear. It simply reminds us that we still have far more to build on than our domestic debate sometimes suggests.