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Since 2021, the financial situation of DTIB companies has improved, with increasing profit margins and investment, larger returns and shrinking debt levels. However, they still need to address a significant cash flow requirement and long payment lead times. Increased defence spending and an expansion of financing opportunities could consolidate this improvement and boost business activity.

2026-03-20T00:00:00+01:00<p>Rising defence spending, increasing at a faster pace since 2022, could trigger an increase in business activity. The rapid development of Defence Technological and Industrial Base (DTIB) businesses and the related benefits are however hampered by lingering supply and hiring difficulties.&nbsp;</p> <p>According to a study published in March 2025 carried out by France&rsquo;s Economic Observatory for Defence and the French Treasury, the economic and financial situation of the DTIB was precarious prior to the Russian invasion of Ukraine. This paper supplements the study by analysing the situation up to 2024 and shows that since 2022 the sector&rsquo;s economic and financial health has been steadily improving. However, long payment lead times and a high working capital requirement point to the need for significant cash flow.&nbsp;</p> <p>Since 2021, intermediate-sized enterprises (ISEs) and small and medium-sized enterprises (SMEs) in the DTIB have seen a sharp increase in their value added, profit margins and investment rates, which are more robust than for comparable non-DTIB companies.&nbsp;</p> <p>The equity of DTIB companies has risen, driven primarily by the increase in earnings. However, their equity levels are still proportionally lower than in the rest of the industrial sector, and the borrowing levels of DTIB companies continue to be more significant.&nbsp;</p> <p>This trend may continue with rising defence spending in France and Europe and an expansion of financing opportunities. The ongoing consultation between the defence industry and the financial sector, set up by the Defence Procurement and Technology Agency (DGA) and the French Treasury in 2025, has facilitated bank financing and helped raise equity funding in the DTIB.</p> <p>&nbsp;</p> <p style="text-align: center;"><img class="marge" src="/Articles/5a3f7128-ed4d-4fc2-8fd8-f6ca7e7182c4/images/81f99523-8544-4742-9f14-3c4777b26310" alt="Visuel TE-384en" /></p>4b4452f6-9c23-4112-8849-43a3eefecc1a

This paper gives a breakdown of the financial assets of French households based on their end use in the economy. Some of these financial assets directly finances businesses, whilst others are invested through financial intermediaries to be used to finance the economy (loans, shares, bonds). For each €10 in financial assets, €4 is allocated to equities in businesses, €3 to bonds and €2 to loans granted to households and businesses.

2026-01-08T00:00:00+01:00<p>Net assets of French households primarily comprise property but also include a diverse range of financial assets which are a reflection of households&rsquo; longstanding appetite for liquid, secure assets. Financial assets include low-risk investments (deposits, savings accounts, euro-denominated life insurance products) and higher-risk assets such as financial securities (shares and bonds) that are held either directly by households or indirectly through financial intermediaries (FIs), as well as equity interests in their businesses.&nbsp;&nbsp;</p> <p>Investments made by households through intermediaries help fund the economy as banks, insurance companies and investment funds use these investments to issue loans and purchase shares and bonds. 60% of these products come from France and 80% from the euro area.&nbsp;</p> <p>A look-through approach was applied to financial intermediaries to examine what is ultimately financed by household savings. For every &euro;10 of household financial assets, &euro;4 is used for equities in businesses &ndash; half of which for business assets &ndash; &euro;3 to invest in bonds, of which &euro;1 relating to general government bonds (mostly in France), and &euro;2 to issue loans.&nbsp;</p> <p>Other stakeholders (particularly businesses and non-residents) also make investments through financial intermediaries that help fund the economy and are not covered in this paper. This paper only covers the financial assets of households, which only represent a portion of the assets of financial intermediaries.</p> <p>&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;"><img class="marge" src="/Articles/4b4452f6-9c23-4112-8849-43a3eefecc1a/images/14770514-81a2-437b-89be-0df1bdf69185" alt="Visuel TE-378en" /></p>