Economy

The increase in defense budgets in Europe will benefit the French economy (cabinet Asterès)

The increase in defense budgets in Europe will benefit the French economy (cabinet Asterès)
Written by on100dayloans

The war in Ukraine will also have positive effects on the French economy. According to the independent consulting firm Asterès, “if the Union isEuropean Union (excluding France) increased its military expenditure to 2% of GDP, this would result in the creation of 60,000 jobs for the French economy, 5.2 billion euros in added value and more than 1.6 billion euros in social and tax revenues (direct, indirect, induced and chain effects over a period of four years. Or 750 million euros in additional income for taxessson the products and 100 million for the itax on the income, 450 million social contributions supplementareas, 200 million additional revenue for taxes of production and 100 million for thetax on the companies (1.6 billion).

The European Union (excluding France) now devotes 1.5% of its GDP to its expenditure military. Germany, but also Sweden and Denmark have already announced that they want to modernize and strengthen their armies. According to the firm headed by Nicolas Bouzou, which gravitates in the circle of economists close to the Minister of the Economy Bruno Le Maire, it was considered that the increase in EU military expenditure (excluding France) from 1.5% to 2% of GDP would represent a net budgetary impulse of 0.5% of GDP, i.e. atno other item of expenditure would be reduced simultaneously”. Then the cabinet estimated that military expenditure is divided half into salaries and half into the purchase of equipment. Finally, Asterès found that “the French arms industrypresents a share twice as high in the European armaments industry as the share of the French economy in the total of theEuropean economy”.

Exports to Europe on the rise

The positive effects on the French economy will be generated by aan increase in arms exports to Europe due to the increase in military spending by all the other countries EU countries. Since her arrival at the head of the Ministry of the Armed Forces, Florence Parly has also made it a priority to accelerate exports to European countries. With some success, since France managed to export the Rafale for the first time to two European countries (Greece and Croatia) as well as three defense and intervention frigates (FDI) to Athens.

“An increase in EU military expenditure (excluding France) of 0.5% of GDP would generate an increase in French exports of 7.2 billion euros”rated the consulting firm. On the other hand, he estimated that the proportion of orders addressed to the military industry of each country is considered equivalent to its relative weight.