What’s Driving the Debate: Aerospace and Defense in Europe / Insights on France

France's defense sector reached a historic milestone in 2025, with the French Procurement Agency (DGA) issuing approximately €38 billion in orders to support national and European rearmament efforts. This growth is underpinned by a robust industrial ecosystem of 4,500 companies and a significant increase in the 2026 defense budget to €57.1 billion. The surge in spending and the emergence of dedicated private investment funds, such as Tikehau Capital’s €150 million vehicle, signal a strategic shift toward strengthening sovereign industrial capabilities in the Aerospace & Defense market.

In 2025, the French defense industry experienced record-breaking activity, driven by the Direction Générale de l'Armement (DGA) placing approximately €38 billion in orders for the national armed forces. This historic high was complemented by over €2 billion in equipment orders for other European nations, reflecting France's central role in the continent's broader rearmament initiatives. These activities align with the 2024-2030 Military Programming Law (Loi de Programmation Militaire), which has facilitated the delivery of numerous systems to French forces while supporting an industrial base comprising 4,500 start-ups, SMEs, and mid-sized firms.

Financial growth in the sector is further evidenced by a strong export market and an expanding national budget. According to the French Minister of Armed Forces, defense exports approached €20 billion in 2025, serving as a vital pillar for the industry's economic weight. Looking ahead, the French Senate has approved a €57.1 billion defense budget for 2026, representing a €6.7 billion increase over the previous year. This funding boost is derived from programmed spending under the 2024-2030 Military Programming Law and is supplemented by a specific €3.5 billion surtax intended to accelerate military modernization.

A significant shift in the financing landscape is also underway, characterized by the mobilization of private capital toward strategic defense industries. In 2025, Tikehau Capital launched a €150 million investment vehicle specifically dedicated to the defense and security sectors, receiving backing from major insurers. This move, welcomed by the Ministry of Armed Forces, highlights the increasing involvement of institutional investors in supporting the French defense industrial and technological base. Additionally, public investment platforms are scaling up their efforts to ensure the long-term sustainability of sovereign industrial capabilities.