From 1st February, the government announced, the Livret A rate will be lowered to 0.5%, its lowest level ever. A drop that no longer takes into account the return of inflation, around 1% currently. The Ministry of Finance confirmed in April that “The rate of the Livret A [n’avait] no longer intended to cover that of inflation “.
According to the calculation formula decided by the government two years ago, the rate should be even lower, at 0.23%. Fortunately for households, the new system also includes a minimum of 0.5%, the rate that will come into effect on 1st February.
But savers are far from being protected. Despite this “floor”, the inflation-adjusted return is negative. In fact, it has already been since 2017 … which does not prevent the French from continuing to favor this investment: 55 million A passbooks earn nearly 300 billion euros.
The reform winners
The new calculation formula continues to integrate inflation, but also includes another important parameter: the interbank rate, which is the average level at which banks lend to each other. These rates (which reflect the “value” of money on the markets) are currently negative. Concretely, you have to pay to lend, and no longer to borrow.
The banks, which must at the same time remunerate the French for their savings, are therefore winners in this decision to pay less the Livret A books. The other winner in this decision is the HLM: 60% of the outstanding Livret A books are paid at the Caisse des Dépôts to finance social housing. However, the latter indexes the level of its loans to social organizations to the Livret A rate. With this drop, organizations will save several hundred million euros per year in financial charges.