Germany's Defence Spending Boom Seen Opening €73 Billion Market for Mid-Sized Firms
A study by Hamburg Commercial Bank finds that German defence spending could channel about €73 billion to companies in 2026, creating opportunities for mid-sized suppliers.
Germany's expanding defence budget could open a durable growth market for the country's small and medium-sized enterprises, with roughly €73 billion of the €108 billion in planned 2026 outlays expected to reach businesses directly, a study by Hamburg Commercial Bank has found.
The volume of spending that flows straight to companies is projected to rise 36% to €72.6 billion in 2026, a faster pace than the 25% increase in the overall defence budget. By 2030, total defence spending is expected to reach €183.7 billion, of which about €140 billion — some 77% of the budget — would benefit companies.
Cyrus de la Rubia, the author of the study, said the sector may create new openings for mid-sized firms that possess specialised expertise or dual-use technologies. Large defence contractors, the study noted, pass on as much as 80% of their order volumes to suppliers, giving smaller companies a route into the supply chain.
Capacity constraints, however, could hold back expansion. Shortages of skilled workers, specialised steel and semiconductors, along with lengthy qualification and certification procedures, are among the obstacles identified.
The study also concluded that while the defence industry can help preserve industrial expertise, jobs and technological capabilities, it will not by itself resolve Germany's broader economic weakness.