French Defense Expenditure US$60.7bn in 2009

Wednesday 13 April 2011, Amsterdam

The new study on the French defense market, reviews and analyses the period 2004-2009 and forecasts the period 2010-2015. French defense expenditure increased at a CAGR of 3.26%, and in 2009, valued US$60.7 billion. The military modernization plans outlined in the French white paper, coupled with perceived terrorist threats and active participation in United Nations peacekeeping missions, of which France is the second largest contributor among Security Council permanent members, has stimulated expenditure during the review period. Such factors are expected to continue to fuel expenditure throughout the forecast period. As a result, and despite budget cuts during 2010-13 to reduce government fiscal deficit, the country's defense budget is expected to grow at a CAGR of 1.50% during the forecast period. The French defense budget, which stood at 2.3% of GDP in 2009, is expected to decline to 2.0% of GDP by 2015 due to budget reductions.

The capital expenditure allocation of the defense budget, which stood at an average of 37% during 2004-08, increased to 41% in 2009 as a result of government modernization plans. Capital expenditure allocation is expected to account for 39% of total defense budget in 2011, before stabilizing at 42% during 2012-15. Common services such as health care expenses and defense infrastructure facilities accounted for the highest budget allocation, with an average of 54% of total budget, excluding other expenses such as research and development and pensions. During the forecast period, the French Army, Navy and Air Force are expected to receive average allocations of 21%, 11% and 12% respectively, excluding other expenses.