France’s commitment to increasing defense spending raises critical questions about its long-term fiscal health. If this spending increase, potentially reaching 3% or more of GDP, isn’t balanced by stricter budgetary measures or EU-level burden sharing, France’s budget deficit could surpass 4% of GDP by 2029. Consequently, general government debt could climb above 120% of GDP, significantly higher than projected levels for Germany (around 60-65% of GDP by 2029).
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As of 2023, France’s military planning outlined a gradual increase in defense spending towards 2% of GDP between 2025 and 2027. This was part of a broader EU response to escalating geopolitical tensions and reflects France’s unique position as the sole nuclear power within the EU post-Brexit.
Continued Spending Trajectory Could Reach 2.5% of GDP by 2029
Currently at 2% of GDP, France’s defense expenditure already exceeds the average for EU NATO members. Maintaining this trajectory could push spending to nearly 2.5% of GDP by 2029.
Figure 1: French defense spending projections to 2029. Columns represent nominal amounts (left axis); dots represent amounts relative to GDP (right axis). Source: National Assembly (France), Ministry of Economy and Finance (France), Scope Ratings.
Should NATO’s target be revised to at least 3% of GDP, France’s annual defense spending could reach €100 billion by 2029, effectively doubling the 2023 budget. This represents a substantial shift in national budgetary priorities.
Even at the current €59.9 billion, 2023 defense expenditure surpasses the €54.2 billion allocated for interest payments on government debt. However, it remains below the €69.4 billion designated for pension payments and the €88.6 billion for education.
Deficit Reduction Challenges and Debt-to-GDP Pressure
France faces a challenging path towards reducing its fiscal deficits and managing its rising debt-to-GDP ratio. While the need for increased defense spending is evident, there are practical limitations to how rapidly this can be achieved.
Capacity constraints within the European defense industry and the European Commission’s Excessive Deficit Procedure, designed to encourage deficit reduction, suggest that meeting any upwardly revised NATO defense spending commitments will be a multi-year endeavor.
The Role of Budget Strategy and European Cooperation
Ultimately, the impact of increased defense spending on France’s fiscal outlook hinges on the government’s budget strategy and the extent of coordination at the European level. Collaboration with Germany, where a new government might be more receptive to joint defense financing, and the UK, as Europe’s other nuclear power, will be crucial.
Conclusion: Balancing Defense Needs with Fiscal Sustainability
France’s increasing defense spending presents a complex challenge: balancing national security needs with long-term fiscal sustainability. The success of this balancing act will depend on effective budget management, strategic resource allocation, and crucial cooperation with European partners. The coming years will be critical in determining whether France can navigate these challenges effectively.
