It’s been years since Livret A has been so attractive. In a few weeks, 58 million savers will be able to benefit from a historic change.
58 million households will be able to benefit from an almost unprecedented new trend. All people holding a Livret A, the regulated savings book most popular with the French, will be able to enjoy a nice surprise in a few weeks. A phenomenon rare enough to be highlighted, and which will bring a certain amount of money to all savers.
The situation is all the more surprising since Livret A does not have the reputation of being particularly profitable. Of course, the sums invested in it are tax-deductible, but its rate of remuneration is often quite low. In fact, this savings account offers a less attractive interest rate than that of the Popular Savings Account (LEP), for example.
The Livret A rate normally changes according to the inflation rate, like all other regulated savings accounts. So, it changes every six months, in February and August of each year. With several successive increases, the Livret A interest rate increased from 0.5% in February 2022 to 3% since February 1, 2023. This significant increase follows the inflationary crisis that France has been experiencing for more than two years. However, the Livret A rate regularly remains below the inflation rate. Clearly, a Livret A makes savers lose money.
The government took the decision this year to maintain the Livret A rate at 3% until February 1, 2025. Thus, it will remain at this level from August 1. But why is this rate freeze good news for savers? The answer lies in the slowdown in inflation in France.
While the inflation rate reached nearly 5% last year, consumer prices in April increased “only” by 2.2% year-on-year. For the first time in a long time, the Livret A interest rate therefore exceeds the rate of inflation. This slowdown is expected to continue in the second half of the year, with inflation rates expected to be well below 3%. Thus, the Livret A will become profitable at least until February 2025, bringing in more than inflation costs.
This unprecedented situation allows holders of a Livret A to see their savings grow, whereas in recent years the low remuneration of this investment did not sufficiently compensate for the drop in the value of money due to inflation. This “amputation” of savings will therefore no longer exist, at least until February 2025. On this date, the Livret A rate should suffer a drop of at least one point, echoing the reduction in the rate of inflation, which could fall below 2% next year according to projections from the Banque de France.
