Germany’s Defence Boom Offers Mittelstand Growth, Says HCOB Study
By Maria Martinez
HCOB Study Highlights Defence Spending Opportunities for German SMEs
BERLIN, Sept 22 (Reuters) - Germany's rising defence spending could create a long-term growth market for small and medium-sized companies, with about €73 billion ($83.72 billion) of the €108 billion outlays planned for 2026 expected to flow directly to businesses, a study from Hamburg Commercial Bank (HCOB) showed on Tuesday.
Key Findings from the HCOB Study
Here are other key points from the study:
Projected Spending and Business Impact
• The volume of spending directly benefiting companies would increase 36% to €72.6 billion in 2026, outpacing a 25% rise in the overall defence budget.
• Total defence spending will reach €183.7 billion by 2030, with around €140 billion, or 77% of the budget, benefiting companies.
Opportunities for Mittelstand and Suppliers
• "For mid-sized companies with specialised expertise or dual-use technologies, the defence sector may open up new business opportunities," said Cyrus de la Rubia, author of the study.
• Large defence contractors pass on as much as 80% of their order volumes to suppliers, creating opportunities for smaller firms.
Challenges and Limitations
Capacity Constraints
• However, capacity constraints could limit expansion. Shortages of skilled workers, specialised steel and semiconductors, as well as lengthy qualification and certification procedures, are among the hurdles.
Broader Economic Impact
• The defence industry can preserve industrial expertise, jobs and technological capabilities, but will not on its own resolve Germany's broader economic weakness, the study concluded.
Additional Information
($1 = 0.8720 euros)
(Reporting by Maria MartinezEditing by Linda Pasquini)
