New momentum for European defense: an opportunity for France?

France is the 7th largest military power in the world and the 2nd largest arms exporter globally, though still far behind the United States. In 2024, out of a total budget of €58.7bn for the Ministry of the Armed Forces, €56.8bn was allocated to the "defense" mission, including €9.5bn for pensions (retirement and disability). The 2024-2030 Military Programming Law has set a budget target of €100bn for the "defense" mission by 2029, representing 3% of GDP compared to the current 2.1%. Can the European defense shift benefit the French economy? Germany, France's largest trading partner, voted for a legislative package amounting to €1tn over 10 years (see special report ), which includes an exemption from the debt brake for all defense expenditures exceeding 1% of GDP. However, Germany accounted for only 0.4% of French arms exports between 2010 and 2024 ( France accounted for 6.1% of German arms imports, making it the 3rd largest supplier, far behind the United States with 58% of total import share ). For the German defense shift to benefit the French economy, it supposed i ) substituting American imports, knowing that American competition remains essential in many defense sectors and that European competition is also strong, and ii) the ability of the French industry to meet this increase in demand, in a context where production capacity utilization rates are close to their maximum and labor shortages exist in the sector. We estimate that the legislative package (infrastructure and defense) passed by the German Parliament could increase French growth by about 0.2% over the next two years. Therefore, we are revising our growth forecast for France to 1.0% in 2026 (+0.1 percentage points, also considering a negative impact from American tariffs), following +0.7% in 2025.