It will finally be 3% for the yield of the Livret A and the Livret de développement durable et solidaire (LDDS) from February 1. The government followed the recommendation of the Governor of the Banque de France who invoked exceptional circumstances to moderate the result of the calculation formula derived from inflation and interbank rates in the Euro zone, which would have led, as we had indicated recently, at 3.3%.
Political choice
The Banque de France recalled that apart from the remuneration of household savings, the Livret A rate also has consequences on the cost of financing the French economy, in particular for social housing whose rates of borrowing depend on that of the Livret A. It is also likely that the banks have made themselves heard to “defend their interests” since they bear part of the interest charge of the Livret A, that is to say up to the funds that they centralise, with the Caisse des dépôts taking over the majority (59.5% of the total).
The Banque de France also underlined that going from the current 2% to 3% already represents a significant increase and considered it desirable that the rate movements of the Livret A and the LDDS remain “ progressive rather than too volatile, and this on the upside as a potentially down day “. This is still the third consecutive revaluation, after those of February 1, 2022 (from 0.5% to 1%) then August 1, 2022 (from 1% to 2%).
What extra pay?
For the 55 million Livret A holders, a rate of 3% will generate up to €688.5 in annual interest for a booklet filled to the ceiling of €22,950, i.e. practically €230 better than today with a rate of 2%. With €10,000 on his Livret A, the surplus would be €100 per year (from €200 to €300), i.e. a total of €25 in interest per month.
A rate of 4% in August 2023?
However, reasoning on an annual basis is not necessarily relevant because these rates of remuneration are likely to be revised every 6 months and therefore from next summer. With the assumption of an inflation peak of 7% at the beginning of 2023 before a real decline from the second half of 2023, the Livret A and LDDS rates could even experience a further significant increase in August 2023. We could then exceed 4% according to our estimates because the €STR rates will continue to increase in parallel. But here again, the Banque de France and the government might prefer to moderate the theoretical rate given by the calculation formula.
18 very interesting months
It is then only in February 2024 that the rates of the two booklets would be revised downwards with a still uncertain extent which will depend on the evolution of inflation and the monetary policy of the ECB. In any case, this would certainly leave 18 months with a very attractive rate for such fully secure, perfectly liquid and flexible savings vehicles, as a bonus not taxed.