British investors became Germany’s largest single source of foreign direct investment in 2025, with capital flows from the UK rising to €26 billion as overall foreign investment into Europe’s largest economy recovered sharply.
Calculations by the German Economic Institute, or IW, based on Deutsche Bundesbank data show that overseas businesses invested around €86 billion in Germany during the year, an increase of approximately 50% from 2024.
Investment originating in the UK rose by around 284% to €26 billion, accounting for almost 31% of the total. That put Britain ahead of the United States, where investment fell nearly 44% to €11.8 billion.
The US share of Germany’s foreign investment consequently dropped from more than 36% in 2024 to around 14% last year. Britain moved in the opposite direction, becoming the country’s largest individual source of overseas capital in the figures analysed by IW.
The headline recovery follows a fall of almost 32% in overall foreign investment during 2024. Annual direct-investment flows can fluctuate considerably, however, and individual large transactions can change country totals sharply. The underlying data can also be revised.
A longer comparison produces a more moderate increase. IW calculated that Germany’s total foreign direct investment during 2025 was almost 11% above the median annual level recorded between 2015 and 2024.
Europe remained the dominant source of capital. European Union countries excluding Germany invested around €43 billion during the year despite a 2.7% fall from 2024. Once British investment is included, European investors accounted for more than 80% of the overall total.
Chinese investment increased by around 51%, but from a much smaller base, reaching €199 million and representing approximately 0.2% of foreign direct investment.
The surge in British capital comes while Germany is trying to improve an investment environment weakened by several years of subdued growth. Manufacturers have faced high energy costs, softer external demand, increasing Chinese competition, demographic pressure, and the expense of modernising established industrial operations.
Berlin is responding with a combination of infrastructure spending and economic reform. Germany is targeting growth of at least 1% next year as its government begins deploying capital from a €500 billion infrastructure programme and seeks to improve conditions for private investment.
The FDI figures should not be interpreted simply as a measure of new factories, offices, or jobs created by British companies. Direct-investment statistics capture cross-border ownership and financing transactions and can include acquisitions and intra-group capital movements as well as greenfield projects.
That distinction is especially important when annual country flows rise several hundred per cent. A small number of large transactions can change rankings quickly, meaning the 284% increase does not establish an equivalent rise in the number of British companies establishing physical operations in Germany.
IW’s comparison with the ten-year median provides a broader measure of the overall recovery. Germany attracted more foreign capital than its typical annual level over the preceding decade, even after allowing for the unusually weak 2024 comparison.
The geographical composition is also revealing. Britain’s departure from the European Union created additional barriers in goods trade, but corporate investment links remain substantial. More than four-fifths of Germany’s foreign investment originated elsewhere in Europe once UK flows are included.
Investment decisions across the region are commonly shaped by access to customers, industrial supply chains, skilled labour, energy, infrastructure, and existing operations rather than political membership alone. Germany remains a large market with significant manufacturing capability despite its recent economic weakness.
The figures also provide a contrast with Britain’s own recent inward-investment data. The number of inward investment projects recorded in the UK fell 25.8% in 2025-26, although the two measures are not directly comparable. Britain’s statistics count qualifying projects, while the German figures analysed by IW measure financial flows.
A single large transaction can therefore have substantial weight in Germany’s headline figure without producing a corresponding movement in project numbers. Conversely, a country can attract a large number of relatively modest investments without recording the same financial value.
Germany’s next challenge is turning the stronger inflow into productive investment capable of supporting growth, infrastructure, and industrial competitiveness. The 2025 figures show a marked recovery in international capital and a major shift towards British investment, while the durability and composition of those flows will become clearer as subsequent Bundesbank data are released.
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