France will increase its defense budget over six years as President Emmanuel Macron seeks to adjust the nation’s military to new threats posed by the war in Ukraine and technological attacks.
(Bloomberg) — France will increase its defense budget over six years as President Emmanuel Macron seeks to adjust the nation’s military to new threats posed by the war in Ukraine and technological attacks.
In a speech Friday, Macron said he expects the state to spend 400 billion euros ($433 billion) between 2024 and 2030, an increase from the 295 billion euros of the 2019-2025 period. The budget, which risks being affected by inflation and energy costs, is set to be submitted to parliament in March. Macron said he is counting on approval by the summer.
The sharp increase led French defense stocks to outperform the Paris bourse. Thales SA shares rose 2.1% to €120.4, the biggest increase on the French blue chip index CAC 40, which itself rose 0.6%. Safran SA added 1.6% to €129.3 and briefly hit its highest closing level since February 2020. Dassault Aviation SA rose 2.8% to €163.4.
“In the face of the transformations of war, France has and will have weapons ready for the dangers of the century,” the president said, speaking from a military base in the southern city of Mont-de-Marsan. He said that new threats are more dangerous because they combine with each other.
Macron detailed a wide range of targets for French defense policies including an increase of 60% in the military intelligence budget over the next seven years and an upgrade of France’s nuclear arsenal. He wants France’s military strategy . He pledged to step up drone and land-air defense capabilities as the risk of high intensity conflict increases. Macron also said he wants to strengthen cyber-deterrence and expand the number of reservists.
The plan, which reflects Macron’s ambition to project French power, comes nearly a year after Russia invaded Ukraine, posing the largest geopolitical threat to western Europe in decades. The war has prompted NATO countries to step up their defense capabilities while also sending military aid to Ukraine.
In a landmark reversal of policy in Germany, Chancellor Olaf Scholz announced shortly after the invasion the creation of a debt-financed, special fund worth €100 billion to help achieve the goal.
Macron requested that the French defense industry reduce the cost of purchase and maintenance for the country’s military.
–With assistance from Julien Ponthus and Tara Patel.
(Updates with market reaction in third paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.