Fox said BAE would go into a “slow, managed decline” without a merger that gives it access to new markets.
“Falling defence budgets in the heavily indebted West means that consolidation in the industry is inevitable. The status quo is not a viable option for the longer term, whatever sentiment might wish,” he wrote in the Sunday Telegraph.
Incumbent defence secretary Philip Hammond has said the government will use its golden share in BAE to win assurances that any deal secures British interests.
French leader Francois Hollande and Germany’s Angela Merkel pledged at the weekend to consult closely on the merger plans.
Barring an extension, EADS and BAE have until 10 October under UK takeover rules to set out detailed plans for the merger.