France Rearmed Its Budget, Not Yet Its Industry: The Shift Imposed by the Drone War

France excels at exports, the drone war catches it off guard

French defense spending has risen 56% since 2017 [1]. Yet the armed forces have only a few thousand drones while Ukraine deploys 15,000 per day on the front [7]. The decision to be made by 2027 is architectural: maintain an industrial model tailored for high-end exports, or pivot toward mass production. This second choice requires a different DGA (Direction générale de l’armement / Defense Procurement Agency), different funding, and a different command chain.

6.8 billion euros in unpaid invoices before building anything new

In 2025, France’s defense budget reaches 50.5 billion euros excluding pensions [1]. That is 3.3 billion more than in 2024. The increase is real.

But 6.8 billion euros in unpaid invoices are accumulating in the DGA’s accounts [4]. This carryover of charges has grown 75% in two years, since 3.88 billion at the end of 2022 [4]. A significant portion of the 2025 budget therefore goes to settling past debts, without building new capabilities.

The military programming law 2024-2030 provided for an envelope of 413 billion euros [5]. A draft updating law filed in 2026 adds 35.7 billion over the 2026-2030 period, bringing the total trajectory to roughly 435.7 billion [5]. In July 2025, President Macron announced 3.5 billion additional for the 2026 budget [5]. Then 3 billion for 2027, aiming for an envelope of 64 billion that year [5].

The Senate formulated a precise warning in its budget report on defense, published in November 2025 [4]. The increase in trajectory “covers to a significant degree an adjustment of the initial programming.” The reason: tensions evident from the start of execution, notably an allowance for overseas operations that was structurally underestimated [4]. What was announced as a new effort is partly a catch-up.

The European comparison underscores the gap. In 2024, Germany increased its military spending by 28% to reach 88.5 billion dollars [2]. It again became the leading military spender in Central and Western Europe since its reunification [2]. Its annual increase alone between 2023 and 2024 equals the total budgetary margins France projected across the entire 2024-2030 military programming law.

France stands at 2.05% of GDP for defense in 2024 [2]. Poland already devotes 4.1% to its defense [2]. The Baltic states oscillate between 2.9% and 3.4% [2].

At the summit in The Hague in June 2025, allies committed to a target of 5% of GDP for defense and security by 2035 [12]. The strictly military component aims for 3.5% [12]. For France at 2%, the gap amounts to tens of billions in additional spending per year, on public finances already under severe strain.

The BITD exports sophisticated systems; war consumes disposable drones

On the industrial front, French export success is undeniable. In 2024, France became the world’s second-largest arms exporter, surpassing Russia [2]. Between the periods 2014-2018 and 2019-2023, its arms exports grew by 47% [2].

The total orders for France’s defense industrial and technological base (BITD) approached 40 billion euros in 2024 [6]. With over 105,000 direct jobs, the BITD controls all sovereign capabilities: land, naval, air, missiles, defense electronics, and military nuclear [6]. Between 2015 and 2022, companies in the sector invested as much as 11% of their revenue in research and development [6].

This success masks a capability gap that is widening in actual war. In Ukraine, drone production reached 4.5 million units in 2025 [7]. Kyiv targets 10 million for 2026 [7]. These devices account for 80 to 90% of Russian losses, according to information gathered by senators [7]. The adversary takes an average of six weeks to neutralize an innovation [7].

On July 7, 2026, the Senate’s Defense Committee unanimously adopted a report with a severe finding [7]. Verdict: “France is not ready for robot war.” French forces have only a few thousand drones, against the 15,000 Ukraine deploys each day [7].

The French industrial model has been optimized to produce sophisticated systems in low volumes, exportable at high prices: Rafale fighter jets, FDI frigates, SCALP missiles. This model built the BITD and its financing. Digitalized war of attrition demands massive volumes, short development cycles, and weekly adaptation [7]. The structure of the defense industry, oriented toward exportable quality, is not aligned with these requirements.

Large prime contractors are the only interlocutors for major programs. A tactical drone startup has no rapid entry path into public procurement. Carl Benedikt Frey documents this in How Progress Ends (2025): technological progress stalls when established actors capture regulation and public contracts to protect their business model [9]. Large prime contractors draw revenue from long-term contracts and margins tied to complexity, not throughput, as Acemoglu and Johnson show in Power and Progress [10].

France has laid some groundwork. It adopted a defense AI ministerial strategy in 2024 and created the AMIAD [1]. In September 2025, it delivered the ASGARD supercomputer, now Europe’s most powerful classified calculator [1]. The PENDRAGON project plans a first combat robotics unit in 2027, combining aerial drones and ground robots [7]. These milestones exist, but their pace remains out of step with the speed of battlefield transformation.

Northwood transforms French deterrence into a partial European shield

The second rupture is doctrinal. Since the end of the Cold War, French nuclear deterrence rested on an inviolable principle: strictly national sovereignty, independent decision-making, defense of France’s interests alone.

France is the only nuclear power in the European Union since Brexit [1]. It holds 290 nuclear warheads [1].

On July 10, 2025, France and the United Kingdom signed the Northwood Declaration [8]. It is the most significant step in Franco-British nuclear cooperation since the Lancaster House accords. The two states commit to coordinating nuclear policy, capabilities, and operations [8].

Three formal pillars structure this agreement: political planning, operational planning, and capability development [8]. A Franco-British Nuclear Steering Group held its first meeting in December 2025 [8]. Within this framework, the United Kingdom observed for the first time France’s nuclear exercise Operation POKER [8].

Bruno Tertrais (FRS/IISS) frames this arrangement as a “complementary nuclear guarantee” rather than a substitute for American extended deterrence [8]. The objective is to constitute a credible safety net should American guarantee prove insufficient or conditional, without breaking with NATO architecture [8]. On March 5, 2025, the President of the Republic formalized this shift in these terms: “These developments strengthen the need to open strategic debate on protection by our deterrence of our continental European allies.”

Northwood preserves national decisions but signals for the first time that Paris and London are prepared to align their strategic postures in the face of major threats weighing on Europe [8]. Extending French deterrence, even in the form of complementary guarantee, transforms the nature of the instrument.

An internal budgetary pressure compounds this. The modernization of both nuclear components—air-launched and sea-based—unfolds simultaneously with the buildup of conventional forces during 2025-2030 [5]. The effective margins of the military programming law are therefore narrower than advertised.

Change the procurement architecture or remain a prestige weapons exporter

The lock is structural, more than budgetary. An industrial model, an acquisition culture, and a hierarchical organization have all been optimized for a war France will probably never be called upon to wage alone. Four architectural decisions confront the country by 2027, each with its trade-offs.

Create a fast-track purchasing path for attritable systems—that is, devices designed to be destroyed in combat. The DGA is structured to qualify complex systems over ten years. A parallel mechanism, inspired by the American Defense Innovation Unit, would allow ordering and qualifying low unit-cost systems in less than twelve months. The trade-off: accept higher levels of technological risk and end the prime contractors’ monopoly on program access.

Finance the BITD through long-term savings rather than public debt. In March 2025, the Finance Ministry opened discussions on this subject [5]. The sector remains insufficiently supplied by investors, due to its technical specificities and regulatory framework [5].

Mobilizing life insurance and pension funds toward earmarked defense bonds would reduce dependence on public credit. Reindustrialization requires a positive vision rooted in skills and territories, writes Nicolas Dufourcq in The Social Debt of France [11]. The BITD is the textbook case.

Push the Northwood architecture to the point of joint capability planning. The Lancaster House 2.0 accord broadened cooperation in 2025 to ammunition, air defense, and industrial resilience [8]. The next step is industrial: a joint Franco-British program for combat drone and loitering munitions production would achieve necessary volumes at lower unit cost, mutualized qualification risks.

Inscribe the NATO objective in a sincere programming law. The credits provided by the military programming law update could bring spending to 2.2% of GDP by 2029 [5]. The 3.5% target by 2035, committed in The Hague, sits 1.3 points away [12]. The trajectory assumes a net adjustment elsewhere in public finances. Sustainability is primarily political: it requires explicitly arbitrating between social spending and security in a debate Tertrais considers inevitable [8].

France has rebuilt a defense budget and export-performing industry. Transforming this success into a capacity for mass industrial war requires changing the basis of the acquisition model, shifting competence toward more agile actors, and unifying financing outside public debt. Three structural decisions. And each costs something to someone.

Sources

[1] Ministry of Armed Forces, “Key Defense Figures 2025,” October 2025, https://www.defense.gouv.fr/sites/default/files/ministere-armees/Chiffres_Cle%CC%81s_2025_FR%20(10%202025).pdf (accessed 24/09/2026).

[2] SIPRI, “Trends in World Military Expenditure 2024,” April 2025, https://www.sipri.org/sites/default/files/2025-04/2504_fs_milex_2024.pdf (accessed 24/09/2026).

[3] SIPRI, “Global military spending rise continues,” press release, April 27, 2026, https://www.sipri.org/media/press-release/2026/global-military-spending-rise-continues-european-and-asian-expenditures-surge (accessed 24/09/2026).

[4] Senate, Finance Committee, “Report on the Draft Finance Law for 2026: Defense,” November 2025, https://www.senat.fr/rap/l25-139-38/l25-139-38_mono.html (accessed 24/09/2026).

[5] Senate, “Report on the Draft Law Updating the 2024-2030 Military Programming Law,” May 2026, https://www.senat.fr/rap/a25-654/a25-654_mono.html (accessed 24/09/2026).

[6] DGA / Ministry of Armed Forces, “Parliamentary Report on French Arms Exports 2024,” July 2024, https://www.defense.gouv.fr/sites/default/files/ministere-armees/Rapport%20au%20Parlement%202024%20sur%20les%20exportations%20d%E2%80%99armement%20de%20la%20France%20(07%202024).pdf (accessed 24/09/2026).

[7] Senate, Defense Committee, “The Drone War: The Urgency of a French Strategic Awakening,” Le Gleut / Conway-Mouret / Blanc report, July 7, 2026, https://francais.rt.com/france/136123-guerre-perdue-france-drones-retard (accessed 24/09/2026).

[8] Bruno Tertrais (FRS/IISS), “The Northwood Declaration: UK-France cooperation and a new European strategic backstop,” IISS Strategic Comments, September 2025, https://www.iiss.org/publications/strategic-comments/2025/09/the-northwood-declaration-uk-france-nuclear-cooperation-and-a-new-european-strategic-backstop/ (accessed 24/09/2026).

[9] Carl Benedikt Frey, How Progress Ends. Technology, Innovation, and the Fate of Nations, Princeton University Press, 2025; associated article, IMF, Finance & Development, September 2025, https://www.imf.org/fr/publications/fandd/issues/2025/09/how-the-battle-for-control-could-crush-ais-promise-carl-benedikt-frey (accessed 24/09/2026).

[10] Daron Acemoglu and Simon Johnson, Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity, PublicAffairs, 2023.

[11] Nicolas Dufourcq, La dette sociale de la France, Odile Jacob, October 2025.

[12] NATO, “Communiqué from The Hague Summit,” June 25, 2025, accessed via IFRI, https://www.ifri.org/fr/audio-presse-contenus-repris-sur-le-site/sommet-de-la-haye-2025-quo-vadis-nato (accessed 24/09/2026).