This is a first since 2020: the Livret A rate will fall from February 1, 2025. Fixed at 3% since the start of 2023, it should increase to 2.5% according to the Minister of the Economy Eric Lombard, in due to the decline in inflation. “The governor of the Bank of France François Villeroy de Galhau will make a proposal to the Minister of Finance, most certainly a reduction”, and it is “around 2.5% […] that the decision will be made,” Eric Lombard said on France Inter.
The formula for calculating the Livret A rate, also valid for the Sustainable and Solidarity Development Booklet (LDDS), is based half on the evolution of prices over the last six months and the other half on an exchange rate between banks. In mid-January, as soon as the final inflation figures for December are known, the governor of the Bank of France will propose a new rate to Bercy, based on the result of the calculation formula or by deviating from it.
The Livret A, this return net of all forms of taxes and duties, is very attractive compared to other savings products offered by bankers and insurers. Theoretically revised every six months, the rate was fixed at 3% until the end of January 2025 by the former Minister of the Economy Bruno Le Maire. A level today higher than inflation but lower than what savers could have had if the theoretical calculation formula had been strictly applied.
“Protected savings”
“The Livret A rate will fall, but inflation has fallen sharply since it is around 1%,” recalled the minister. Even with a less profitable Livret A, “savings are not only protected but they allow real assets to increase”, he explained. Another consequence of the drop in inflation, the rate of the Popular Savings Account, reserved for low-income individuals, should also fall, “from 4% to 3% if we apply the formula”, Philippe Crevel explained to AFP, director of the Cercle de l’Epargne think tank.
According to Philippe Crevel, this probable rate cut would serve a dual government objective. On the one hand, revive consumption to stimulate growth and tax revenues, particularly via VAT. On the other hand, supporting a building sector in crisis: “The Livret A resources serve as a basis for loans made to social landlords. The higher the Livret A rate, the higher the loan rate,” explains Philippe Crevel. The household savings rate was at 18.2% of gross disposable income in the third quarter of 2024, according to the latest available figures, three points above the pre-Covid average. “So Eric Lombard’s objective, like that of his predecessors, is for there to be a little more consumption and a little less savings,” concludes the specialist.