AXA CEO Urges Next French President to Tackle Debt With Reforms

AXA SA Chief Executive Officer Thomas Buberl called on France’s next president to address the country’s debt mountain with structural reforms and rejected a far-left plan to cancel bonds as “dangerous.”

The euro area’s second-biggest economy is under intense scrutiny, with a runaway deficit, soaring interest costs and faltering growth. Repairing public finances has become a key issue in campaigning ahead of next spring’s presidential elections.

“This new government will have to address the structural issues with reforms in order to get the budget into a better balance,” Buberl told Bloomberg Television on Tuesday. “Increasing taxation year after year will not solve the structural problem.”

The head of the Paris-based insurer said there would be a strong reaction from investors if France’s challenges weren’t addressed. The additional yield on French 10-year bonds over their German counterparts, a measure of risk, has already climbed to nearly 1 percentage point, the highest level since Europe’s sovereign debt crisis more than a decade ago.

“The risk is then that the markets will show very clearly that they are dissatisfied,” he said. “The message is very clear: there is no opportunity but to restructure the public finances.”

French insurers and banks are among the government’s main lenders. AXA has about 12% of its assets invested in the country.

Buberl also warned against a proposal from far-left presidential candidate Jean-Luc Mélenchon to cancel bonds held at the European Central Bank and the Bank of France. Some surveys of voting intentions show him reaching the second-round runoff.

“The discourse around debt and potentially not repaying debt, to my mind this is a very dangerous discussion,” he said. This “plays with fire and plays with the credibility of France.”

Photograph: AXA SA CEO Thomas Buberl; photo credit: Chris Ratcliffe/Bloomberg