Half of German companies name bureaucracy as their biggest location problem.

The ifo Business Survey finds that 50 percent of German companies cite bureaucracy and regulation as their biggest location problem, ahead of energy costs at 27 percent and labor costs at 22 percent. The findings are based on 4,449 open-text responses collected in July 2026.

The ifo Business Survey conducted in July 2026 shows that 50 percent of German companies name bureaucracy and regulation as their biggest location problem. Energy costs rank second at 27 percent, followed by labor costs at 22 percent. The analysis covers 4,449 open-text responses from industry, construction, retail and services. Solo entrepreneurs report the issue least often at 33 percent, while large companies report it most at 59 percent.

ifo survey director Klaus Wohlrabe points to two channels of harm: bureaucracy ties up staff that could work elsewhere, and it blocks investments that no longer pay off once permit and documentation costs are factored in. He argues the second effect is the more expensive one, because it never shows up in any statistic since the project simply never starts. Companies with employees, facilities and export business are hit hardest because they fall under several regulatory regimes at once.

The survey relies on open-text answers without preset categories, and multiple answers were allowed, which is why the shares add up to more than 100 percent and why the scale of the problem should be read with some caution. It remains open which specific rules companies find most burdensome and whether the federal government will translate the findings into measurable relief.

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