“We are still very far from the war economy”

Ihe tocsin does not sound in the villages of Europe, but in Brussels people are starting to talk about the war and its economic consequences. We agree to increase the production of ammunition and the manufacture of military equipment. After sixty years of construction around the concept of economic prosperity guaranteeing peace, the conflict in Ukraine is pushing Europeans to reconnect with the military thing.

It was in June 2022 that President Emmanuel Macron brought out of the cupboards of history the idea of ​​a war economy. In other words, the need for the State to mobilize economic resources in the service of the military effort. With the consequences that our parents and grandparents experienced: return to autarky, collapse of private consumption, state control over monetary and of course industrial policy.

Of course, we are still a long way from that. In a note for the Jean-Jaurès Foundation, the economist Renaud Bellais, co-director of the Defense Observatory, recalls some useful proportions. Currently, France spends 2% of its gross domestic product (GDP) to maintain and equip its armies. This is the figure recommended by NATO and which its partners such as Germany are struggling to achieve. By way of comparison, when the United States plunged into war in 1942, military spending reached 37% of GDP and 90% of that of the federal state. The production of boats, planes or ammunition was gradually multiplied by almost twenty.

Arbitrations

Nothing to see, then. But the current crisis is a reminder, according to Renaud Bellais, that for twenty years in Europe, the format and military expenditure have been halved. And the production of ammunition by four. This period, marked by the regular laments of the chiefs of staff, is coming to an end. Not only to supply kyiv, but also to adapt at high speed to the new strategic deal. The current level of equipment and manpower of the French army would not allow it to hold out more than a few weeks in a conflict as intense as the one unfolding in Ukraine. As the military say, faced with the rise of geopolitical tensions, our system lacks the thickness and depth to be credible.

For French defense manufacturers, the world’s third-largest exporter behind the United States and Russia, this new situation holds the promise of a spectacular industrial revival which will require a great deal of investment and human resources. For the rest of the economy, this rather portends complicated budgetary arbitration at a time when priorities (environment, health, education, etc.) are not lacking.