German institute warns against high expectations for investment summit

The German Economic Institute (IW) has warned against expecting too much from an investment summit hosted by Chancellor Friedrich Merz in Berlin on Monday and Tuesday, saying high costs continue to deter companies from investing in Germany.

"For six years, almost all economic growth has come from public-sector stimulus," IW director Michael Hüther told dpa.

"It would be naive to believe that the summit will change that in the short term. Companies don't choose Germany because of a promotional event. What matters is whether they can make money here."

Hüther said labour, energy and bureaucracy costs in Germany remained far too high, with indicators showing that the country had been losing ground in these areas for years.

"It would therefore be more effective if the government swiftly implemented its reform agenda," he said.

The two-day Invest in Germany Summit begins on Monday at a former power plant in Berlin, where Merz is set to welcome representatives of numerous German and international companies.

The government hopes the event will help boost private investment in Europe's largest economy.