Tens of millions of French people will see their income drop in 2025 with the revision of interest rates on savings accounts that the governor of the Bank of France will formalize in a few days.
The Bank of France is preparing to make announcements which will affect more than 50 million savers in France, bad news concerning the rate of remuneration of their savings accounts. In January, the governor of the Banque de France, François Villeroy de Galhau, will officially reveal the new interest rates for tax-free savings accounts, including the Livret A, the Livret de Développement Durable et Solidaire (LDDS) and especially the Livret de Développement Durable et Solidaire (LDDS) Popular Savings Booklet (LEP). These changes will come into effect on February 1, 2025 and are expected to result in lower yields.
The Livret A, the preferred savings product of the French who hold some 56 million, will see its interest rate increase from 3% to around 2.5%. This decrease follows the decline in inflation observed in 2024, which fell to 1.3% in December, compared to 4.1% the previous year. The formula for calculating the Livret A rate takes into account not only inflation, but also interbank rates, and these two elements combined have led to this downward revision. Although the rate falls, savers should keep a positive real return, with inflation remaining below the passbook interest rate.
The LEP, for its part, will also suffer a drop in its rate, but the situation is more uncertain. This booklet, reserved for people with modest incomes, is currently remunerated at 4%, but it could drop to 3%. This rate is set according to inflation and, although the formula suggests a more marked drop, a rule prevents the LEP from falling below 0.5 points above the Livret A. This means that the rate cannot be below 3%, which offers some protection to the most vulnerable savers. However, it cannot be ruled out that the Banque de France will propose a higher rate, as it has already done in the past to protect the purchasing power of low-income households.
This drop in rates represents a hard blow for many French people. Indeed, with an average outstanding amount of €7,077 on the Livret A, the annual interest will increase from €212 to €177, i.e. a loss of €35 for the average saver. Even if the real return remains positive, this reduction could be perceived as an erosion of purchasing power for households who rely on their savings accounts to obtain additional income without risk.
LEP holders, who are often low-income households, will also see their interest drop, although the exact level remains to be determined. A drop to 3% is likely, but everything will depend on the decision of the governor of the Bank of France in the days to come. For these savers, every percentage point counts, and a drop in the rate, even if limited, could have significant repercussions on their ability to save.
The final announcement of the new rates will take place in mid-January, after the publication of the final inflation figures for December. This biannual rate review is a standard procedure, but it comes at a time when inflation is falling, which naturally leads to less attractive savings returns. It remains to be seen whether these changes will affect savers’ confidence in these savings products.