The French defense sector climbed on Monday, following President Emmanuel Macron's announcement to double the country's military budget by 2027, three years ahead of the initial 2030 target.
On Sunday, Emmanuel Macron pledged an additional €3.5 billion for the armed forces in 2026 and €3 billion in 2027, exceeding the current military spending plan. The president cited "world shifts happening faster than expected" that threaten freedom in France and across Europe as the motivation behind the accelerated investment.
Thales and Dassault Aviation—identified by Jefferies analysts as the primary beneficiaries of this budget boost—were up 1.2% and 1.9% respectively around 11:08 GMT, while both the CAC 40 and SBF 120 indices were in negative territory.
The brokerage noted that 22% of Thales' sales come from the French defense sector, compared to 32% for Dassault Aviation.
Safran and Airbus are also expected to benefit, albeit to a lesser extent. Meanwhile, shareholders in MBDA (Airbus, BAE Systems, and Leonardo) should gain from the increased focus on saturation and precision munitions as well as enhanced strike capabilities, the broker added.
The president emphasized that the increased defense spending should not be financed through debt, but rather through greater activity and higher production.
(Written by Diana Mandia, edited by Augustin Turpin)
