All options were on the table. But the one that has been chosen is the most unexpected. Against all expectations, the rate of the Livret A – as well as that of the Livret de développement durable et solidaire – will not move on August 1st and will remain at 3%. However, the strict application of the formula, which takes into account in particular the half-yearly average of inflation, led to a new theoretical rate of 4.1%. Regulated savings specialists were still counting on a derogation from the rule, to take into account the impacts on the economy, with a compromise of 3.5%.
In the end, the government decided for a more radical decision, the status quo. "We have decided to maintain the rate at 3%," confirmed this Thursday the Minister of the Economy Bruno Le Maire on the set of the 13 Hours of TF 1.
In order to pass the pill, the governor of the Bank of France guarantees savers the maintenance of this rate over 18 months, until January 2025. And the Livret d'épargne populaire only falls to 6% while the slowdown in inflation to 4.5% in June, should have lowered its rate to 5.6%. "We must continue to promote popular savings through the development of the LEP," insists François Villeroy de Galhau who proposes to raise the ceiling from 7,700 to 10,000 euros. And sets a target of at least 12.5 million LEP (against 9.7 million today) for 18.6 million eligible French people.
Up to 230 euros of loss of earnings for a saver over one year
Not sure that this is enough to extinguish the anger of the French holders of a booklet A and not eligible for LEP, who were impatiently waiting for this revaluation. For an average outstanding amount of €5,800, maintaining at 3% instead of moving to 4% represents a shortfall of €58 in interest per year. If you are at the ceiling of 22,950 euros, the note increases to 229.50 euros.
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This decision by Bercy and the Banque de France is in any case a relief for the banks and the Caisse des dépôts et consignations (CDC) which manage respectively 40% and 60% of the outstanding amount of the Livret A (400 billion euros) and the Livret de développement durable et solidaire (142 billion euros). Thus, in a full year, a rate increase of 1 percentage point would have cost banks nearly 2.2 billion euros. Insurance companies can also breathe even if the record collection recorded on the Livret A came rather from transfers from current accounts and that there was no "cannibalization of life insurance by the Livret A" as explained to us Franck Le Vallois, CEO of France Assureurs.
The relief is even greater on the social housing side. With a passage to 4%, social landlords, who have 140 billion in debt with the CDC through variable-rate loans indexed to the Livret A, would also have seen their interest expense increase by 1.4 billion euros per year. The same applies to local authorities and SMEs. Eric Lombard, director general of the CDC, had also pleaded last weekend that the rate of the livret A remains stuck at 3%: "Since inflation is transitory, it would be logical that this effort is asked of savers to support social housing and local development". His arguments were finally heard.