Germany Is Bleeding Out

High energy costs, a grotesque regulatory density, and sky-high taxes are driving capital out of Germany and into the arms of more attractive destinations. Berlin is trying to reverse this outflow with state demand, but it has not grasped the obvious: only better structural conditions will bring the money back.

The archives of economic institutes, the German Bundesbank, and Destatis are full of statistics. Yet one decisive figure is hard to pin down — the movement of investment capital. Too much is politically at stake, because this number exposes the failure of national policies with brutal clarity. Companies are voting with their feet.

Flunking the Class

The most recent evidence comes from a 2024 study by the German Economic Institute (IW), based on Bundesbank data. It calculates net foreign direct investment by comparing outward German investment flows with foreign investment in Germany. The result: a shocking net capital outflow of €64.5 billion in 2024 — a straight “F” for the government.

This is not speculative market money chasing small yield differentials. It’s productive corporate capital and equity, directly tied to real economic activity, job creation, and wealth. And increasingly, it’s avoiding Germany.

The Disaster Year

2022 marked the low point — a true disaster in capital flow terms. Roughly €112 billion fled Germany that year. About a third of this capital traditionally flows to the United States, where President Trump is currently laying the foundation for America’s reindustrialization: deregulation, tax cuts, and the end of the CO₂ climate cult.

With his aggressive tariff policy, Trump is increasing the pressure on firms operating in the U.S. For many, investing directly in American jobs and production capacity has become the only way to stay in the game. A growing number of European firms will follow.

This outflow follows a clear secular trend. Since 2018, German productivity has been shrinking. The loss of investment capital is the direct result of destructive energy policy and suffocating regulation. In 2021 alone, €81 billion left the country. The only year with a slightly positive net inflow was 2020 — the lockdown year — when the global economy was frozen.

Deindustrialization is now visible in the labor market as well. Since 2019, the government has created roughly 420,000 public sector jobs, but the private economy has shed around 1.2 million. Germany’s economy is in retreat, the victim of Brussels’ regulatory zeal — which Berlin often outdoes.

Berlin’s Last Hope: A Debt Bonanza

Faced with this disastrous trend, the government’s last hope is its massive debt package. Berlin is betting everything on subsidies, guaranteed prices, and state-backed purchase agreements to lure private investors back.

Finance Minister Lars Klingbeil (SPD) promoted Germany as an “investment opportunity” during the IMF Annual Meeting in Washington — ironically, at the very place where political sentiment has shifted away from the eco-socialist model that dominates Europe.

Neither Berlin nor Brussels will succeed in reversing the capital flight this way.

The Wealthy Are Jumping Ship

Migration trends among the wealthy are a reliable indicator of a country’s tax and investment climate. According to the 2025 Henley Private Wealth Migration Report, around 400 millionaires are expected to leave Germany by year-end. Their exit will contribute an estimated €2 billion in lost private capital and business stakes.

The political response? More debates on inheritance and wealth taxes. Petty. Short-sighted. Morally sanctimonious.

The outflow of wealthy individuals is a clear warning signal. High taxes, hostile rhetoric, and regulatory overreach are driving them out.

Ever Higher Taxes

As in Germany, rising wealth and inheritance taxes in other countries accelerate this exodus. Even Norway, with its wealth tax, is learning how mobile capital has become — people vote with their feet when their contribution to national prosperity is punished instead of valued.

Britain remains the world champion in millionaire flight, with inheritance taxes up to 40 percent. About 16,500 high-net-worth individuals are expected to leave the UK this year — even faster than Germany’s wealthy are fleeing.

Europe seems trapped in a socialist spiral of regulation and fiscal overload — with no intellectual exit in sight. A reminder to all redistribution enthusiasts: capital flows to where it’s treated best, and it creates prosperity there.

The Winners of This Migration

The winners are clear: the UAE leads with about 10,000 new millionaires, followed by the U.S. with 7,500. Switzerland gains around 3,000. Italy adds 3,600, Portugal 1,400, and Greece 1,200. Investors appear to view Europe’s debt crisis as a signal to shift capital southward, where conditions are turning more favorable.

Short-term political opportunism may reward populist envy rhetoric, but it inevitably leads to division and economic decline. Europe’s capital flight is a warning sign — and Germany is at the center of it.

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Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.