a (small) unexpected boost

For savers, Santa Claus passed on January 14 through the chimney at 1 p.m. on TF1. While a week earlier, the Prime Minister, Jean Castex, announced that a boost to the Livret A was not envisaged, the Minister of the Economy, Bruno Le Maire, chose Jacques Legros’ set to announce that, finally, the Livret A rate would double the 1is February, from 0.50% to 1%. This also concerns the remuneration of the Sustainable and Solidarity Development Booklet (LDDS), modeled on that of the Booklet A.

The normal application of the formula for calculating the rate would have resulted in a slightly lower increase, at 0.8%. But following the recommendation of the Governor of the Banque de France, the government has therefore decided to go further, to reach this symbolic “percent stack”.

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In practice, this doubling will provide a gain of 27.50 euros in additional interest over one year for a person with 5,500 euros in savings on their Livret A (i.e. the average amount held at the end of 2020 on this product, according to the Bank of France). For a couple with two Livrets A and two “full” LDDS, with 69,900 euros thus invested, the gain reaches 349.50 euros.

A first in ten and a half years

This is the first time in ten and a half years that an increase has been recorded. It is also the first time since the election of Emmanuel Macron that the government, which intends to encourage the French to invest in the long term and to diversify their savings, concedes a boost to regulated, tax-exempt savings, by departing from the formula he himself wrote.

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“The strong symbolic significance of the rate increase is linked to the place occupied in the population by the Livret A, the most widespread savings product in France. More than four out of five French people have one », underlines Philippe Crevel, director of the Cercle de l’épargne. If three months before the presidential election, and in a context of tensions caused by the impact of inflation on households, this boost to some 55 million Livret A holders will not go unnoticed, it is far from compensating for the increase in consumer prices, estimated by INSEE at 2.8% over one year.

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The Governor’s proposal is a compromise aimed at “better ensure the remuneration of Livret A holders, without creating too high an additional cost, in order to preserve the financing of social housing and other regulated savings uses”, explains the Bank of France.

In short: if inflation remains above the Livret A rate in the coming months, and this is what is expected, the real value of the savings thus invested will fall. Or rather continue to decline, since this phenomenon was already at work, to a lesser extent, in recent years.

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Mark Holland

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