No country in Europe, and probably in the world, has sought to draw inspiration from the example of the Livret A, yet held by more than 8 out of 10 French people who appreciate its virtues. Investigation of this French exception.
” Hello. What is the Livret A rate in Spain and other European countries? This question was sent to us some time ago by a MoneyVox reader, via our contact form. The answer is in one sentence: the Livret A exists only in France!
Neither Germany, nor Great Britain, nor Italy: no other European country has chosen to offer its population a savings product that ticks all the characteristics of the Livret A. As a reminder:
- a rate set by public authorities (the Banque de France, and possibly the government), taking particular account of the rise in consumer prices;
- a total tax and social exemption interests ;
- a state capital guarantee ;
- a availablity in almost all banking establishments;
- the centralization of part of the collection by the Statein order to finance public policies.
Abroad, other forms of incentive to save
France, of course, is not the only country to encourage its nationals to save. But most have chosen a much more limited path. Often, of simple tax exemptions.
This is particularly the case in the United Kingdom. Across the Channel, domiciled persons can open, from the age of 16, a ISA, for Individual Savings Account (individual savings account). Rather than a banking product as such, it is an envelope for saving up to £20,000 per fiscal year without paying taxes on the income generated. This ISA can thus take the form of bank deposits (we then speak of Cash ISA), but also stocks and bonds (Stocks and Shares ISA) and even equity loans (Innovative finance ISA).
In Belgium, the tax exemption applies only to savings accounts. The first 980 euros declared of interest generated each year are exempt from the “withholding tax”, the equivalent of the single flat-rate levy (PFU) in France. The regulations also set a minimum remuneration for these savings accounts. This is currently… 0.01%, to which is added a loyalty bonus of 0.10% on deposits remaining in the account for 12 consecutive months. Either a floor rate of 0.11%.
In Germanythere is also a possibility of tax exemption, at the request of the saver, up to 801 euros per year for all capital income.
Finally, the product that comes closest to the French Livret A is the Libretto di postal risparmio, distributed in Italy at post offices. Like its French equivalent, the deposits on this postal book are guaranteed by the Italian State and are used in particular to finance public investments. Its interests, however, are taxed.
The universal booklet par excellence
In any case, we are quite far from the Livret A and its cousins, the Livret de développement durable et solidaire (LDDS), the Livret d’épargne populaire (LEP), the Plan Epargne Logement (PEL)… “C It’s a totally atypical product,” confirms economist Philippe Crevel, one of the best specialists in regulated savings.
In France, the State does not content itself with offering a tax exemption. It also guarantees the capital invested, independently of the European mechanism for guaranteeing bank deposits, and ensures its full availability. In exchange for this, it captures part of the collection, via its financial arm, Caisse des Dépôts, to finance sectors considered to serve the general interest : social housing, city policy, energy renovation of public buildings, etc.
The combination of two other characteristics makes French-style regulated savings an unparalleled product. The first one : its universality. Formerly exclusive to Caisse d’Epargne, Banque Postale and, in its “Livret Bleu” version, to Crédit Mutuel, the Livret A has been distributed since 2009 by all banking establishments that so wish. It is also accessible to anyone present in France, including minors from birth, homeless people and those who have recently arrived in France. It is also on the Livret A that La Banque Postale relies to carry out its mission of banking accessibility.
La Banque Postale: the underside of the universal Livret A account
“Preserving the purchasing power of savers”
Second characteristic: it is the public authority that sets the remuneration for these administered savings accounts, on the basis of a calculation formula included in the regulations. This does not only take into account the state of monetary rates, but also the rise in prices. One of the missions of Livret A, since its distant origins at the beginning of the 19th century – it celebrated its bicentenary in 2018 – is, in fact, to preserve the purchasing power of savers. An objective still included in the decree framing its calculation formula.
Result: if it is fashionable to criticize the low remuneration of the Livret A, it is today one of the highest paying bank books in Europe, no doubt in the world. On a French scale, the difference between the remuneration of the Livret A (1% net of tax) and that of bank books at market rates (0.063% net of PFU) is enormous. And it’s not over, since the Livret A rate is likely to double from August 1, due to high inflation.
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Totem and taboo
Universality, total safety, taking into account inflation: all these characteristics explain why more than 80% of people residing in France, modest or rich, young or old, hold a Livret A, according to figures from the Banque de France’s Regulated Savings Observatory. Why, too, his aura far exceeds that of a simple savings product. Over its 200-year history, it has even become a totem. “The Livret A is a political phenomenon, the slightest drop in the rate of which leads to psychodrama”, notes Philippe Crevel.
Consequence: touching the benefits of Livret A is risky. Without even talking about a possible deletion, which is frankly taboo. According to our exclusive survey, conducted in partnership with YouGov (1), only 12% of respondents would be in favor of its removal. And 58% would even like its payment ceiling, currently 22,950 euros, to be raised.
Exception or anomaly?
However, from an economic point of view, the virtues of the Livret A are debated. “If no country has imitated France, there is a reason,” summarizes economist Philippe Crevel.
On the plus side, it constitutes a safe investment. “It plays an essential role in the event of a major financial crisis, as in 2008”, notes macro-economist Cyril Blesson, co-founder of Cahiers de l’épargne. “It makes it possible to avoid the massive withdrawal of liquidities from the banking circuits, because people have confidence in the signature of the State. »
On the minus side, it is expensive for the public authorities, due in particular to the impact of the tax and social exemption from which it benefits, and which above all benefits wealthy households. “There is a sort of image of Epinal of the Livret A, a savings product for ordinary people”, criticizes Cyril Blesson. “However, its outstanding amount is very concentrated and massively held by the richest. It is a form of tax shelter. »
Its indexation, even attenuated since 2020, on inflation also has macroeconomic effects. “The Livret A is in fact the key savings rate in France. Each of its rises forces the market to make very rapid adjustments. In doing so, it curbs the monetary policy impulses of the European Central Bank, whose role is precisely to protect the value of the currency over the long term,” observes Cyril Blesson. The Livret A is therefore not only an exception. It is also, in some ways, a anomaly that sets France apart compared to its euro area partners.
(1) The survey was carried out on 1,003 people representative of the French national population aged 18 and over. The survey was conducted online, on the YouGov France proprietary panel, from June 17 to 20, 2022.