The drop in the rate of savings accounts the most popular, Booklet A et the Popular Savings Booklet (LEP)is specified for February 2025. After having benefited from a period of stability at 3% for the Livret A and 4% for the LEP, savers could see their returns fall due to recent economic developments and falling inflation .
A Livret A rate reduced to 2.5%?
According to initial estimates, the rate of Booklet A could go down to 2,5 % next February, compared to 3% currently. This figure, put forward by the director general of the Deposit fundEric Lombard, is based on a half-yearly revision based on inflation and the interbank rate (rate at which banks lend money to each other). This rate has been frozen since February 2023 to maintain an attractive return despite high inflation at the time.
The calculation of the current rate takes into account both the average inflation and the €STR (Euro Short-Term Rate), which would be around 3.5% between July and December 2024. Although the Banque de France could intervene to limit this decline, current forecasts point to an inevitable reduction.
LEP: from 4% to potentially 3% or less
For the 10 million LEP holdersthe prospect of a reduction is also worrying. The LEP rate could increase from 4% to around 3 % if economic indicators hold up. Indeed, the LEP rate is strictly aligned with inflation over the last six months, which tends to decrease with an estimate of 1.2% for October. However, regulations require that the LEP rate be 0.5% higher than that of the Livret A, which would guarantee a less marked drop.
Savers could also hope for intervention from the Banque de France or the Ministry of the Economy to avoid too sudden a fall, as was done during previous revisions.
Increased competition from life insurance and other investments
Faced with the drop in savings account rates, life insurance products recorded good results, with net collection of 2.5 billion euros in September, one of the best performances in 15 years. Life insurance, particularly in euro funds, is becoming more and more attractive for French people looking for a secure and potentially more profitable investment. In September, life insurance contracts reached a record 12.3 billion euros in contributions.
Financial wealth on the rise but consumption at half mast
The trend towards savings remains strong among the French, with financial assets estimated at 6,267 billion euros at the end of March 2024, almost three times higher than the market capitalization of the CAC 40. This “reserve” is also sparking debate within the National Assembly, certain parliamentarians proposing tax adjustments, particularly in terms of inheritance tax on life insurance.
While the official decision is expected in mid-January, savers will have to adapt to these new rates for their regulated investments, while exploring other savings options to compensate for the loss of yield.
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