Bad news for your Livret A: the rate reduction confirmed, when will this announcement apply ?

On January 15, 2024, the governor of the Bank of France, François Villeroy de Galhau, proposed to Eric Lombard to lower the Livret A rate. A proposal confirmed a few hours later by the Ministry of the Economy.

The Ministry of Economy confirmed on Wednesday that the Livret A rate will be lowered to 2.4% on February 1, compared to 3% currently, on the proposal made earlier in the day by the Governor of the Bank of France.

Minister Eric Lombard “will strictly apply the regulatory calculation formula to arrive at a reduction to 2.4%”, indicates a press release from Bercy. The rate of the Livret d'épargne populaire (LEP) will go from 4% to 3.5%.

The governor of the Bank of France, François Villeroy de Galhau, had proposed on Wednesday to the Minister of the Economy to reduce this rate from February 1, to go from 3% currently to 2.4%.

As of February 1st

“I am proposing this (Wednesday) morning to the Minister of Finance a rate for the Livret A savings account reduced from 3% to 2.4% as of February 1st, which is a rate that is still significantly higher than inflation,” said Mr. Villeroy de Galhau during a hearing at the Senate Finance Committee.

Logical since it reflects the decline in inflation in recent months, this reduction would be a first since the beginning of 2020, when the rate fell from 0.75% to 0.50%, before gradually rising again.

And we have to go back to 2009 to find a more significant decline, greater than 0.6 percentage points.

The savings market’s compass, the Livret A rate, also valid for the Sustainable and Solidarity Development Booklet (LDDS), is theoretically revised twice a year.

Consume rather than save

The drop in the Livret A rate is bad news for the 57 million holders of a “little red booklet”.

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However, it offers a breath of fresh air to the players who pay it: banking institutions and the Caisse des Dépôts (CDC), which Éric Lombard headed until his appointment as Minister of Finance at the end of 2018. December.

The amounts deposited in Livret A and LDDS savings accounts are 59.5% managed by the CDC and are mainly intended to finance social housing.

This rate reduction will also be viewed favorably by insurers, who offer a competing savings product, life insurance.

It also encourages the French to consume rather than save. The governor thus deplored a “high household savings rate […]” before the senators.

The Livret A and LDDS savings accounts were filled with an additional 17.5 billion euros between January and November 2024, to reach an outstanding amount of 582.3 billion euros, according to the latest data from the CDC.

Boost for the LEP

While the governor of the Banque de France strictly applied the calculation formula for the Livret A rate, he wanted to deviate from it for the rate of the Livret d'épargne populaire (LEP), which would increase to 3.5%, compared to 4% currently, instead of the 2.9% theoretically planned.

“On the Livret d'épargne populaire, which is the product that best protects the savings of the most modest, I recommend that its rate be set at 3.5%, which is significantly above the mechanical formula”, declared Mr. Villeroy de Galhau before the senators.

“It is essential to continue this momentum in favor of popular savings”, insists the Banque de France in its press release.

The number of holders of this booklet, accessible subject to income conditions, tends to level off: it stood at 11.8 million at the end of 2024, still far from the 19 million eligible.

“Banks can and must do even better” to market this product, the governor stressed.

Only people declaring up to €22,419 in taxable income for a single person, or €34,393 for a couple (two shares) can hold a LEP.

Banking institutions themselves are only timidly participating in the growth of the LEP. The product is not at the forefront of banking institutions' branches or websites.

The savings page on the Banque Populaire website does not offer it. This is also the case for the Caisse d’épargne.

LCL does not display it on the home page of its website, and, rather than its advantageous rate, prefers to highlight on its savings page the necessary income conditions and the limited savings ceiling.