We knew the shields that protect the purchasing power of the French, but it is in a way a new shield that will have the opposite effect for many households: that of capping the rate of remuneration of the Livret A and the Livret de développement Sustainable and Solidarity (LDDS). It is indeed a great surprise that this proposal from the Banque de France not to increase the rate of these two savings accounts from next month but to leave them at 3% when the calculation formula indicated a rate of 4, 10%.
3% until January 2025
The second surprise comes from the suggestion to maintain this rate of 3% for 18 months, ie until January 2025 (next revision in February 2025). These two proposals were accepted by the Minister of the Economy, Bruno Le Maire, who had previously confirmed that he would follow the recommendations of the Governor of the Banque de France.
Quite fallacious arguments
Without going into a long controversy, the arguments put forward by the Banque de France are quite fallacious and rather roughly taken up by Bruno Le Maire. First, we are told that inflation has started to fall: well, good, but the formula for calculating the Livret A rate would have reflected it in due time. It should not be forgotten that when inflation was at its highest, the Livret rate had not yet benefited, precisely because this formula reflects inflation with a 6-month lag. What also makes you wonder why this calculation formula, rather well designed with a mix of inflation and short-term bank interest rates in the euro zone, exists if it is to finally be discarded for a year and half…
Second main argument invoked, increasing the Livret A to 4% would have serious consequences on the production of social housing. Also true since lenders borrow at rates that depend on that of the Livret A, but why should it be savers who should compensate for this risk? The government could very well have neutralized this increase in funding for social housing. Behind these arguments are also certainly hiding the consequences of the banking lobby which bears part of the cost of the remuneration of the Livret A, without forgetting the life insurers who were beginning to take a dim view of the collection of savings accounts breaking records.
The fake good news
The fact of maintaining this rate at 3% for 18 months is also far from being good news, as presented by Bruno Le Maire in the 1 p.m. newspaper of TF1. According to our calculations, with inflation excluding tobacco which could drop to 4.4% in the second half of 2023 (according to the latest INSEE projections) and interbank rates which will continue to pass on the rise in key rates with a delay, the calculation formula would certainly have given a rate at least close to 4% during the next revision in February 2024. It is only from the summer of 2024 that the formula would have passed on the fall in inflation while interbank rates will surely not drop much. To sum up, it is therefore still at least 1 point of return lost for 12 months…
Popular savings is the only winner
The real good news therefore does not concern the Livret A and the LDDS but the People’s Savings Account (LEP). This is the other surprise, the public authorities have decided to exceptionally deviate from the formula for calculating the LEP rate, which is modeled entirely on inflation, which led to a drop to 5.6%. It will finally be 6% (6.1% today) to promote popular savings through this means-tested booklet. And so that the many holders who have already fulfilled their LEP to the ceiling of €7,700 benefit from it, this ceiling will be increased to €10,000.
to remember
A savings account filled in to the ceiling of €22,950 will bring in around €669.4 this year in annual interest based on an average rate of 2.92% (2% in January and 3% from February to December) if no withdrawal is made for 12 months.
For the LDDS (12,000 € ceiling), the same calculation leads to 350€ of annual return.