Place your money in a savings account earning more than 6% per year and whose interest is entirely exempt from tax and social charges. A prospect which is likely to attract many savers. These characteristics thus explain the great popularity of the popular savings account (LEP) in recent years, with now more than 11 million French people holding this tax-free investment according to the latest figures published by the Banque de France.
Let’s think about it: just a few months ago, the LEP allowed savers who had reached the deposit ceiling of €10,000 to earn up to €600 euros in interest per year net of tax. The only thing is: over the semesters, this level of remuneration has eroded. While the annual passbook rate reached 6.1% a year and a half ago, this percentage has been significantly reduced since then, to 4% since August 1, 2024. A downward movement which will continue in the months future.
Two reasons explain this future reduction in the rate. The first is linked to the recent rate cut announced by the European Central Bank. French banks in fact pass on to their clients’ accounts the interest on the cash they hold in accounts at the ECB. If the latter decrease, the interest on the savings accounts will also tend to decrease. However, after lowering its rates in September, the ECB should do it again in October.
The second explanation for the future drop in LEP rates is linked to the decline in inflation since the start of 2024. A slowdown in price increases which has a direct impact on the rate of remuneration of the popular savings account, since the latter is revised twice a year depending on the level of inflation. A phenomenon which explains the double drop in the LEP percentage this year, at a rate of one point less per semester.
And given the inflation forecasts from INSEE and the Banque de France for the months to come, this downward trend of one point per half-year is expected to continue. According to projections, the LEP rate could thus be halved in one year. While it still stood at 6% in January 2024, it should soon be around 3% when it is next updated on February 1, 2025.
Such remuneration would make the popular savings account much less attractive in 2025, which could push some savers to turn to other investments. A movement which should nevertheless remain very limited.
Firstly because the LEP will always remain an excellent cash investment, with funds remaining available at all times. Then because even a remuneration of 3% would still remain interesting in view of the future downward rates displayed on the savings market, the LEP rate remaining, for example, in all cases higher than that of the Livret A. Finally, because that this booklet presents guarantees in the face of the increase in taxation on savings to be expected in the coming months, as the new government seeks to reduce the public deficit. As the LEP is intended to protect the savings of the most modest, it should not be subject to cuts in this context of budget cuts.
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