It is this week, just after the publication Thursday morning of the final inflation figures for the month of June, that the new remuneration rates for the Livret A, Livret de développement durable et solidaire (LDDS) and Livret d’épargne will be announced. Popular (LEP) applicable from 1 August.
5.6% for LEP
For the LEP, there will be no surprise since the calculation formula, directly derived from consumer prices (excluding tobacco), applies without possible derogation in order to protect popular savings from inflation. It will therefore be 5.6%, ie the average annual inflation for the last 6 months. This corresponds to a decrease of 50 basis points compared to a current remuneration of 6.1%.
With regard to the Livret A and the LDDS which share the same calculation formula, there is still uncertainty because it is very unlikely that this rule will be applied to the letter. This is a real headache for the public authorities who have to arbitrate between preserving the real return on the preferred savings vehicle of the French in the inflationary context that we are experiencing and the cost incurred for financial establishments and social housing whose borrowing rate depends on that of the Livret A.
A devious calculation formula
There is, however, a calculation formula which finally passes on the peak of inflation and therefore leads to a new sharp increase in the rate of remuneration of the Livret A and the LDDS from August 1st. Based on an inflation average of 5.6% over the first 6 months of the year and a half-yearly average of the €STR of around 2.65%, this theoretical rate is 4. 10%.
As last January during the previous revaluation of the yield of the two booklets, the governor of the Banque de France, François Villeroy de Galhau, should however propose to reduce this theoretical rate. The final decision then rests with the government, but the Minister of the Economy, Bruno Le Maire, assured France Info in early May that he would accept the Banque de France’s proposal as he has always done, while insisting on its responsibility for ” protect the savings of the French, especially in this period of crisis “. Quite ambiguous remarks because if the minister really wanted to protect the savings of the French people from inflation, the easiest way would be to let the calculation formula do it.
It is in this context that the banking lobby has been very vocal in recent months, including the managing director of Caisse des Dépôts, Eric Lombard, who pleads for the stability of the Livret A rate at 3%. In fact, the banks bear only part of the burden of interest on the Livret A, i.e. up to the amount of the funds they centralise, with the Caisse des dépôts bearing the majority (59.5 % of total) to finance social housing. But with 400 billion euros accumulated by the French on the Livret A, the financial stakes are high.
Two Main Scenarios
Several scenarios can be envisaged for the Banque de France’s proposal. The first, the most desirable for French savers, would be to round up the next Livret A and LDDS rates to 4%. The second, a priori the most probable, would be to further reduce the theoretical rate to 3.50% (or even 3.75%), knowing that François Villeroy de Galhau had considered it desirable last February that the rate movements of the Livret A and of the LDDS remain “ progressive rather than too volatile, and this on the upside as a potentially down day “.
To know
A LEP filled to the ceiling of €7,700 should earn around €444 in interest this year on the basis of an average rate of return of 5.77% (4.6% in January, 6.1% from February to July and 5.6% from August to December) which will more than cover inflation. For a couple, this can represent nearly €900 in earnings provided they have €15,400 in savings and do not touch it for 12 months.
to remember
For a livret A filled with a maximum of €22,950, with the scenario of a rate set at 3.5% from August, we obtain under the same conditions a little more than €717 in annual interest on the basis of an average rate of 3.125% (2% in January, 3% from February to July and 3.5% from August to December).
For the LDDS (12,000 € ceiling), the same calculation leads to 375€ of annual return.