Emmanuel Macron wants a war economy. The phrase suggests a nation pivoting its entire industrial engine to churn out shells, Caesar self-propelled howitzers, and Mistral missiles with the frantic efficiency of 1944. But the reality on the ground in France is less a surge and more a grinding gears-shift. While the rhetoric from the Élysée Palace is meant to signal a hard-line stance against Russian aggression in Ukraine, the French defense industry is wrestling with a decades-old addiction to "boutique" manufacturing and glacial procurement cycles.
France is currently the world’s second-largest arms exporter, but its success has historically been built on high-margin, low-volume contracts for sophisticated jets and submarines. Shifting to a high-volume, "war economy" model requires more than just a presidential decree. It requires a fundamental dismantling of how French defense contractors—and the banks that fund them—operate.
The Shell Gap and the 155mm Problem
The most glaring indictment of the current state of affairs is the production of 155mm artillery shells. This is the basic currency of modern high-intensity conflict. For two years, European stockpiles have been drained to support Kyiv, yet the ramp-up in production remains dangerously slow.
Before the conflict in Ukraine, French defense giant Nexter produced roughly 50,000 shells a year. Macron’s government wants that number to triple. To an outsider, tripling production sounds like a simple matter of adding shifts and buying more steel. It isn't. The bottleneck isn't just the factory floor; it is the supply chain of energetic materials.
France lacks sufficient domestic production of the specific powders and modular charges required for long-range artillery. Eurenco, the European leader in powders and explosives, is only now moving its production back to Bergerac. This "reshoring" of vital components takes years, not months. You cannot command a chemical plant into existence overnight. While the government pushes for "priority orders" that allow the state to seize civilian production capacity for military needs, the legal framework to actually execute such a move is a bureaucratic minefield that remains untested in the modern era.
The Bank Blockade
Investigative looks into the French defense sector reveal a hidden enemy: the financial institutions. Despite the government's push for a militarized economy, French commercial banks remain incredibly hesitant to fund defense projects.
Many major lenders have adopted strict Environmental, Social, and Governance (ESG) criteria that effectively treat weapons manufacturing as a "sin industry" on par with tobacco or gambling. This creates a surreal situation where the state demands a massive industrial expansion, but the private capital required to build the new assembly lines is locked behind a wall of corporate social responsibility. Small and medium-sized enterprises (SMEs) in the defense supply chain—the shops making the specialized valves, sensors, and gaskets—report being denied basic credit lines because their end-product is "lethal."
Without a mandate that forces banks to recognize national security as a primary "social" good, the war economy remains a state-funded project with a hard ceiling. The French government has hinted at using popular savings accounts, like the Livret A, to fund the defense industry. This is a desperate move. It signals that the traditional financial system is no longer aligned with the state’s strategic survival.
Quality versus Quantity
For decades, the French military doctrine has favored "just enough" of the "very best." The Rafale fighter and the Leclerc tank are marvels of engineering, but they are built like Swiss watches. They are expensive, complex, and take thousands of man-hours to assemble.
A war economy demands the opposite: "good enough" in "massive quantities."
The French defense procurement agency, the DGA, is famous for its perfectionism. It often demands bespoke modifications that add years to development timelines. To achieve a true war footing, France has to stop over-engineering its hardware. There is a brutal trade-off here. If you simplify a missile to make it faster to produce, you might lose the edge that keeps your pilots safe. But if you keep the complexity, you run out of missiles in the first week of a major engagement.
Macron is asking the DGA and manufacturers like Dassault and Thales to embrace a culture of "simpler and faster." For an industry that prides itself on being the gold standard of global aerospace, this feels like a step backward. It is a psychological hurdle as much as a technical one.
The Labor Shortage Nobody Wants to Address
Even if the money flows and the supply chains stabilize, there is the problem of the people. France is facing a massive shortage of specialized labor in the defense sector. We are talking about high-precision welders, electronics technicians, and systems engineers.
The industry needs to hire roughly 15,000 to 20,000 people a year to meet the new production targets. However, the French education system has spent years steering students away from heavy industry and toward the service and tech sectors. Defense work often requires high-level security clearances, which further shrinks the available pool of talent.
There is also the geographic problem. Many of these factories are located in "Middle France," far from the cultural magnets of Paris or Lyon. Convincing a 25-year-old software engineer to move to a small town to work on missile guidance systems is a hard sell in a competitive global market. The state is attempting to "re-industrialize" the country, but you cannot build a war economy with a workforce that has forgotten how to build things.
The European Mirage
France's strategy is also tethered to the hope of European strategic autonomy. Paris wants a war economy that serves all of Europe, reducing the continent's reliance on American hardware. But this vision is clashing with reality.
Poland is buying tanks from South Korea. Germany is buying F-35s from the United States. While France talks about building a unified European defense industrial base, its neighbors are making pragmatic, "off-the-shelf" purchases to fill their immediate gaps. Every time a European neighbor buys American or Asian gear, the "market" for French-made "war economy" goods shrinks.
This creates a dangerous feedback loop. Without massive export orders, the unit cost of French equipment stays high. Because the cost is high, the French military can afford fewer units. Because they buy fewer units, the factories never achieve the scale needed to lower costs. To break this cycle, France needs more than just a war economy; it needs a European sales monopoly that simply does not exist.
The True Cost of Readiness
The most uncomfortable truth is that a war economy is inherently inflationary and economically distortive. Diverting steel, energy, and labor to the military sector takes those resources away from the civilian economy. In a country already struggling with high energy costs and a restless electorate, the pivot to permanent military production is a political gamble.
The French public supports Ukraine, but that support hasn't yet been tested by the realities of a "guns versus butter" fiscal policy. When the bill for 100,000 shells a year starts eating into the budgets for healthcare or education, the "war economy" rhetoric will face its real trial.
Military readiness is not a switch you flip. It is a long, expensive, and often boring process of maintaining assembly lines that you hope you never have to use at full capacity. For thirty years, France—and the rest of Europe—collected a "peace dividend" by letting these muscles atrophy. Now, the attempt to rebuild them is revealing just how deep the damage goes.
The government can pass all the "military programming laws" it wants, but until the banks start lending, the chemists start mixing, and the engineers start simplifying, the "war economy" is just a high-concept brand for a very old and very tired industrial base. The transition isn't failing because of a lack of will; it is failing because the foundations of modern France were built for a world that no longer exists.
Stop looking at the delivery dates for the next batch of tanks and start looking at the delivery dates for the machine tools that make them. That is where the war will be won or lost.
