Along with Austria and Switzerland, Germany had done a good job of improving English teaching in recent years, the study from language training company Education First (EF) found.
"I don't think it's a bad sign that we've dropped out of the top ten," EF country manager for Germany Niklas Kukat told The Local.
"We have improved our score compared with last year, but other countries managed to slip in front of us."
Nevertheless, Kukat thought that Germany should be aiming as high as the top five worldwide to boost the value that English adds to the country's reputation and economy.
But a drop in the number of German school pupils and students going to English-speaking countries on exchanges in recent years threatened to undermine language skills, he said.
Good English, strong economy
"The correlation between income and English knowledge is there. For the German economy, as an exporting nation, it's very important that we have a high level so that we can work with partners and companies in other nations," Kukat said.
For the first time the study has revealed the connection between countries' English levels and their achievements in innovation, by looking at metrics such as technology exports and spending on research and development.
"Countries with higher English proficiency have more researchers and technicians per capita," said the report.
"The ability to learn from the research of others, participate in international conferences, publish in leading journals, and collaborate with multinational research teams is dependent upon excellent English," it concluded.
The report also found that correlations between countries' English ability and Gross National Income per capita, quality of life and internet connectivity remained strong and stable.
The good news was that EF was seeing demand for their English classes increase day-by-day and year-by-year, as well as noticing improvement in the public education sector, Kukat said.
"The English skills of recent graduates in Austria, Germany and Switzerland indicate that English instruction in these countries has recently become more effective," EF authors wrote in the study, adding that "strength in the youngest adults is a positive indicator for the future."
Germany boosted its standing further above the European average, with an increase on EF's English Proficiency Index (EPI) of 0.94 points to 61.83 (European average: 55.65).
Austria took 10th place and Switzerland trailed behind in 19th.
But France was not even in the top half of the 70 countries tested worldwide, coming in at just 37th place.
Inside Germany, Hamburgers were the best English-speakers, with the northern port city achieving a near-Scandinavian score of 66.34.
Image: English First
Closely following were Cologne, Munich, Frankfurt and Stuttgart, while Berlin wasn't much better than the national average at 62.88.
Meanwhile, German women's English was slightly better than men's, with an average score of 62.20 compared with 61.57 – repeating a pattern seen across Europe and the world.