The Livret A rate will drop in February, announces the Minister of the Economy

Monday 06th January 2025 02:09 PM

Bad news for savers. The Livret A rate will fall on February 1, the Minister of the Economy announced this Monday. “The governor of the Bank of France François Villeroy de Galhau will make a proposal to the Minister of Finance, most certainly a reduction”, and it is “around 2.5% […] that the decision will be made,” declared Eric Lombard on France Inter.

Fixed at 3% since the start of 2023, the Livret A rate could potentially drop 0.5 percentage points at the start of the year, Eric Lombard said in October, when he was still general director of the Caisse des Dépôts (CDC), before he was appointed Minister of the Economy at the end of December.

The rate of the Popular Savings Booklet will also fall

The formula for calculating the Livret A rate, also valid for the Sustainable and Solidarity Development Booklet (LDDS), is based half on the evolution of prices over the last six months and the other half on an exchange rate between banks. In mid-January, as soon as the final inflation figures for December are known, the governor of the Bank of France will propose a new rate to Bercy, based on the result of the calculation formula or by deviating from it.

Another consequence of the drop in inflation, the rate of the Popular Savings Booklet, reserved for individuals with modest incomes, should also fall, “from 4% to 3% if we apply the formula” according to Philippe Crevel, director of the Cercle de l’Epargne think tank.

According to Philippe Crevel, this probable rate cut would serve a dual government objective. On the one hand, revive consumption to stimulate growth and tax revenues, particularly via VAT. On the other, supporting a construction sector in crisis: “The Livret A resources serve as the basis for loans made to social landlords. The higher the Livret A rate, the higher the loan rate,” explains the specialist.

The latest information on Livret A

The household savings rate was at 18.2% of gross disposable income in the third quarter of 2024, according to the latest available figures, three points above the pre-Covid average. “So Eric Lombard's objective, like that of his predecessors, is for there to be a little more consumption and a little less savings,” concludes the specialist.