France in worse state than UK in 1970s: Axa boss
France is in a worse state than Britain was at the time of its 1976 bail-out by the International Monetary Fund, one of the nation's best-known businessmen has declared.
Henri de Castries, the chairman and chief executive of Paris-based Axa, the world's largest insurer by premium income, said in an interview that the government of President Francois Hollande must learn the lessons of Britain's experience.
"The UK was not in great shape in the early 1970s," he said. "Mr Hollande has to decide if he wants to be Harold Wilson or Tony Blair ... So far he has been ambiguous. I hope he is going to go for Blair. I am not asking him to become Margaret Thatcher.
"It could get worse but I am convinced that at one stage or another, reason will prevail."
The action of James Callaghan, Wilson's successor as British prime minister, in asking the IMF for a £2.3 billion loan in 1976 is generally regarded as one of Britain's lowest economic points of the postwar era.
When asked if France's heavily indebted economy was in an even worse condition, Mr de Castries replied: "Yes, because the world has changed.
"Things are changing way faster than they were in the 1970s or '80s with technology, capital and talent available everywhere in the world, which was not the case then. This is making the lack of action, vision and priorities a much more difficult thing and a much bigger sin than before."
Axa previously held a majority stake in Australian life insurer Axa Asia Pacific. After being frustrated in taking a full stake, the Australian life business was later sold to AMP for more than $4 billion. Under Mr de Castries Axa emerged with the high-growth Asian businesses.
Last week, the European Commission told France to cut labour costs, reform its pensions system and open up its protected markets in exchange for a two-year window to bring its budget deficit under 3 per cent of its gross domestic product.
"France, as the European Commission rightly said, is in dire need of doing some serious structural reforms to labour laws, education and public spending," he said.
Pointing out that French public spending is 56 per cent of GDP - 10 percentage points higher than the average of the other eurozone countries, he said the difference represents €200 billion ($271 billion) a year in France's €2 trillion economy.
"This €200 billion is money taken out each year from the people who know how to make money, create jobs and foster growth to subsidise benefits, and public projects that do not necessarily have any significant rate of return," he said. "So it is no surprise that the competitiveness is not optimal. The question in France is not so much about reducing the deficit; it's about reducing the spending."
He said Axa's French business, which accounts for 20 per cent of group revenues, was growing and highly profitable because the company had never been afraid to adapt to changing conditions.