Europe's defence industry is set to reap a $US50 billion ($69 billion) windfall as the terror attacks on Paris prompt governments to ramp up spending on military capabilities spanning cyber security to fighter jets, armoured vehicles and drones in an effort to defeat Islamic State.

France, where Dassault Aviation's Rafale fighter jet is made, has halted plans to cut almost 10,000 military personnel, while Germany will spend an extra €8 billion ($11.7 billion) on defence and Britain has earmarked a further £12 billion ($24.9 billion), benefiting companies including BAE Systems. Italy said Tuesday it would devote €1 billion more to security, after the draft budget called for €2 billion of reductions.

A French Air Force Dassault Rafale F1 aircraft in the skies of Iraq. Credit:SGT Mick Davis

European governments are rethinking their defence policies after years of cuts tied to the draw down in Afghanistan and Iraq and austerity programs imposed after the global slump. The spending commitments will swell budgets that had already begun to revive amid heightened tensions with Russia following last year's annexation of Crimea, with Britain committing in August to spending 2 per cent of GDP on defense.

The spending forecast was made before last night's incident where Turkey shot down a Russian warplane, further increasing geopolitical tensions.