No boost for the favorite placement of the French: the remuneration of the booklet A will fall to 0.5% on February 1. The Minister of Economy and Finance Bruno Le Maire, announces to the Parisian – Today in France. According to him, it would be “irresponsible and inconsistent” to keep it at 0.75%. And it encourages investors to “diversify” their investments.
What will be the next rate of remuneration for passbook A?
It will be 0.5% from February 1. This figure takes into account low interest rates and the level of inflation. I would like to clarify that if we applied the calculation formula, the remuneration of the Livret A would fall to 0.23%. But as we were committed, it will never fall below the floor level of 0.5%. The same will apply to the Sustainable and Solidarity Development Booklet (LDDS). In six months, we will see if we need to revise this rate.
You could have decided to keep the rate at 0.75%. Why didn’t you do it?
Because it would be irresponsible and inconsistent. Inconsistent with our investment diversification policy. And irresponsible for the thousands of French people who are waiting for social housing. This new rate will make it possible to build 17,000 additional social housing units and to renovate 52,000 of them each year.
You could have kept the rate of the Livret A at 0.75% and made the choice to increase the fine of the municipalities which refuse to build social housing?
I do not believe that the good policy is that of coercion and additional taxation. Or the one who makes very short-term decisions where you want to drape yourself in Robin Hood clothes when in reality you are weakening the French economy.
But out of the 300 billion euros in booklet A, almost half is not used each year …
It is true, all this money is not used for social housing. A portion of the book A outstanding could be used to finance other projects. For example thermal renovation, ecological transition or renovation of hospitals, schools and nurseries. The deputies Jacques Savatier (LREM) and Gilles Carrez (LR) will make proposals on this diversification of the use of the funds of the booklet A.
By lowering the rate of the Livret A, do you not take back with one hand what you have given with the other so far with the tax cuts for example?
Let’s stay serious! If you have a passbook A with 4800 €, which corresponds to the average, this drop to 0.5% will make you lose one euro per month. On the other hand, the drop in income tax is € 300 more on average per year.
But what do you say to the French who, with a Livret A rate lower than inflation, will nevertheless lose purchasing power?
The Livret A remains an attractive investment: it is fully tax-free, liquid and guaranteed by the State. But I want to say to households: diversify your savings! Not just according to the level of risk, but according to your investment horizon.
What is the advice of the Minister of the Economy?
If you want to have money available right away, the Livret A remains the best investment. But if you have a longer term horizon, you can opt for the new Eurocroissance product in life insurance or the stock savings plan (PEA) which has been simplified. Today, you can withdraw part of the money after 5 years without closing the account. And if your horizon is even further away, our retirement savings plan (PER) is extremely attractive: all payments are deductible from income tax. Already, in less than 3 months, 60,000 PERs have been opened.
Do you not fear that the French will invest in foreign funds like BlackRock rather than in French SMEs?
I see the controversy around BlackRock (Editor’s note: the first American fund, suspected of taking advantage of the pension reform). We are told BlackRock takes up too much space. But it is mainly because there is no French or European BlackRock. You have to build one!
Aren’t you afraid to encourage the French to take too much risk with their money?
I’m not saying to the French, take risks! I tell them, diversify your investments.
Isn’t your speech on diversification inaudible for the modest Frenchman who needs cash?
You are right. It is a real challenge, that of financial education. With the Governor of the Banque de France, we have launched Savings Meetings for the general public, which will take place across the country in 2020.
Will the remuneration of the people’s savings account, currently 1.25%, also fall?
The LEP rate will drop to 1%, the same level as inflation. This is a direct consequence of the drop in the rate of the passbook A. But it will remain at least at the same level of inflation. The LEP is therefore more remunerative than the livret A. We want to make it more attractive because, if it is available means-tested, 40% of households can benefit from it. However, there are only 7 million LEP for 40 billion outstanding. I would encourage the households that are eligible to open one.
How? ‘Or’ What ?
By simplifying the opening conditions. Today, you must present your tax form to the bank, upon opening and then again each year. It’s discouraging. We will remove this obligation: the bank will automatically check whether the client meets the LEP resource conditions. In addition, the tax authorities will send an electronic message in the spring to all households that can benefit from a LEP to make it better known.
For several years, French people have been investing their money in housing savings plans (PEL), which are often very profitable. Will their rates be planed?
No. All ELPs will keep the same remuneration. I can see that the banks believe that these rates, sometimes up to 4%, 5% or 6%, are too high. They ask us to come back to it but this will not be the case.
You invited companies to raise wages. Is this not a way to ask the bosses to compensate for the disengagement of the state?
On the contrary ! The State has taken all the necessary measures since 2017 to better compensate work: abolition of unemployment and sickness contributions, activity bonus of € 100, abolition of the tax at 20% on profit-sharing and participation in SMEs, lower income tax … But there is a reality: since the financial crisis of 2008, the rise in wages has primarily benefited the industrial sector and managers and has been very limited for the 10% of employees least well paid. The standard of living of the poorest workers remains a major social and economic challenge, which no one can dismiss with the back of their hands. This debate exists in France, it also exists in Europe.
We announce you to Matignon, if Edouard Philippe leaves. Do you think about it while shaving?
We have a very good Prime Minister, whom I fully support, especially in this period when we have to carry out a difficult pension reform. In addition, I am very happy as Minister of Economy and Finance and I wish to register in continuity for this position.