The Council of Economic Analysis (CAE) notes that currently, “one-third of European military equipment is imported” and that “more than half of the imports come from the United States.”
The objective is to bring out “economic opportunities offered by current European rearmament.” The CAE calls for a “policy change in Europe.” After thirty years of underinvestment, EU defense spending is expected to reach an average of 2% of GDP in 2025, the historical minimum standard of NATO, with a target now increased to 3.5% by 2035. “The economic opportunities offered by rearmament will not materialize on their own,” the note stated on Wednesday.
The CAE, a body attached to Matignon, noted that currently, “one-third of European military equipment is imported” and that “more than half of the imports come from the United States.” France is the world’s second largest arms exporter but only the third largest exporter to Europe behind Germany. Economists at the CAE observe that major armament systems are five times more numerous than in the United States (98 compared to 18, including three multirole aircraft programs to one, seven tank models to one, nine howitzer models to two, and seven infantry fighting vehicles to two).
Aim for “35% joint procurement within the EU by 2030.”
This fragmentation “prevents economies of scale and increases production and maintenance costs,” the note said, also highlighting a delay in European military research and development investment: 13 billion euros in 2024, about one-fifth of the US$84 billion in 2022. In this context, it recommends that France establish “an independent commission, with defense clearance and reporting to the Ministry of Armed Forces,” to “evaluate the performance of armament and maintenance contracts,” and to “ensure value sharing within the industry among primes, subcontractors, and new entrants,” like drones, where “France has not timely taken the turn.”
To “develop at the European level,” the CAE believes it is necessary to “encourage consolidation” of the sector for major weapon systems and aim for “35% joint procurement within the EU by 2030, prioritizing European equipment.” It also recommends “significantly strengthening the R&D share in defense investments by doubling the budget of the European Defense Fund,” to at least €3 billion per year. The authors also highlight the difficulty they faced in obtaining data in the military sector, advocating for “access to tools” to better evaluate this public policy.
*Context: The Council of Economic Analysis (CAE) in France has highlighted the need for a policy change in European defense spending to strengthen their position in the global arms market.
*Fact Check: France is indeed the world’s second largest arms exporter and has been actively involved in promoting joint defense initiatives within the European Union.
