The income of defensive companies Thales and Dassault Aviation are in danger of the political crisis affecting the Franceas budget delays threaten a much -publicized increase in military spending.
Specifically, President Emmanuel Macron announced a budget increase of € 3.5 billion in 2026 and € 3 billion in 2027 for the army, which will raise France’s defensive budget to € 64 billion in 2027, twice as much as the 2017 level, when he took over.
However, three government collapses in the last year, including the removal of Prime Minister Francois Bairou in September, have postponed votes on the 2026 budget. This has created uncertainty about Macron’s commitments, according to Bloomberg analysts.
Budget delays also create further uncertainty about the already problematic FCAS fighter aircraft program, a joint venture of France, Germany and Spain.
Dassault is in conflict with Airbus SE over the terms of its cooperation with Indra Sistemas SA, and Germany is discussing ways to continue without the French company. Dassault and Thales’ shares have been left behind in relation to the huge profits that their competitors in the European Defense Sector have earned.
Even if the military budget is approved by parliament, there are long -term reservations as the pressure to tackle a growing fiscal deficit could lead to a reassessment of what is possible.
OR Thales represents 13% of French defense spendingwhile the Dassault represents about 6%according to estimates by Bloomberg analysts. Dassault is less exposed as the French Defense Ministry is a “second -class customer” for Rafale fighter aircraft, ODDO BH analyst Yan Derocles said in an interview.
France is struggling to repair damage from crisis
Thales is more vulnerable, with the French defense expected to be about 15% of this year’s total revenue, according to Derocles’ estimate. In 2024, France represented about 1/4 of Thales orders.
Additional Rafale orders from India would help Dassault, while Denmark recently placed a order to Thales for the Samp/T N NG missile system.