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Foreign investors more loyal to Germany than ever before: study

[BERLIN] Foreign investors are more loyal to Germany than ever before, with only 8 per cent planning to relocate parts of their operation elsewhere, according to a survey by EY published on Tuesday - the lowest figure since the survey launched in 2005.

"Germany is currently among the most attractive business locations in the world," said Hubert Barth of EY's executive board. "Investors find a well-educated workforce here and can count on good political, social and legal security, which is a big plus in politically and economically uncertain times."

In a global poll of 735 businesses, 69 per cent named Germany as one of the three top investment locations in Europe. This was followed by the United Kingdom with 43 per cent, and France with 36 per cent.

More than four fifths of investors were attracted by Germany's communications and transport in addition to its well-qualified workforce.

However foreign investors said an increasing number of attacks on foreigners and an anti-immigrant movement in Germany had the potential to have a negative impact on foreign firms' willingness to invest in the future, EY partner Peter Englisch said.

Attacks on refugee shelters increased more than fivefold in 2015 and Interior Minister Thomas de Maiziere said on Tuesday that the numbers were likely to increase again this year.

The anti-Islam Pegida group holds regular anti-immigrant rallies and the anti-immigrant Alternative for Germany (AfD) surged in recent regional elections.

The cost of staff and labour in Germany was also a negative factor for investors, with only 37 per cent finding these attractive - 13 per cent fewer than in the previous year.

"Investor decisions must be economically viable", said Mr Englisch. "And if Germany becomes too expensive, more investors will shy away from their engagement here".

Last week, figures from the German trade and investment agency revealed that Europe's largest economy attracted a record 6.2 billion euros (S$9.5 billion) in foreign investment in 2015, as the number of new investors reached an all-time high, mainly because of growing interest from China.