It was to be expected: with inflation slowing down to 1.2% in October, the interest rate on the Livret A will therefore decrease. Currently at 3%, with no taxation, this savings account, which generates more than 420 billion euros in savings, remains a very attractive investment. Its total holdings are nearly five times lower than that of life insurance, which is under the scrutiny of the “fiscal guillotine” of the Finance Committee of the National Assembly. While taxpayers continue to wait to learn what kind of tax burden will hit them in the 2025 budget, the Caisse des Dépôts has announced a reduction in the Livret A rate.
In 2025, the Livret A rate would thus drop from 3% to 2.5%, impacting 56 million savers in France. The decrease in the Livret A rate is due to the downward trend in inflation. The government is rushing to reflect this decrease, whereas during the double-digit inflation surge, it was slower and far less generous. Cheating the saver, while the State has been financially strained for ages, seems to be a French Olympic sport!
So, while Livret A savers will have to endure a reduction in returns, no one knows which financial products they might turn to since none can yet predict how new taxes will evolve! This absurd situation is fueled by the major political crisis we are currently facing. One consolation is that a lower Livret A rate will make financing social housing cheaper. After all, 2.5 million households are waiting for social housing in France. Let’s not forget that our country is also experiencing a major real estate crisis.
Others will argue that with a lower Livret A rate, the French will save less and thus consume more, potentially reviving sluggish growth. Household consumption has historically driven this growth, artificially fueled for decades through subsidies and the creation of civil service positions. Hence the disastrous state of public finances. Save less and spend more? That remains to be seen, as the French have been saving heavily for months (for those who can) due to fears about the future... However, the multiple crises facing the country do not encourage a reduction in this “precautionary savings.” On the contrary, banks holding Livret A accounts might slightly restore their margins. To serve our economy? To be seen. The proliferation of SME bankruptcies, social plans (Michelin, Auchan...), and the great fragility of the German economy do not bode well. The French are not confident about the future, which is the primary motivation for their thirst for savings.