Germany's defence spending boom opens opportunity for Mittelstand, HCOB says

By Maria Martinez

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.

Here are other key points from the study:

• 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.

• "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.

• 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.

• 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.

($1 = 0.8720 euros)

(Reporting by Maria MartinezEditing by Linda Pasquini)