The Livret A rate will drop but this implies two pieces of good news for the French

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The year 2025 promises to be a year of change for French savers. The rate on the Livret A, a flagship savings product in France, is expected to drop on February 1.

The CEO of Caisse des Dépôts, Eric Lombard, announced that the rate could drop from the current 3% gross to around 2.5%. This downward revision is due to the decline in inflation, which fell to 1.2% in October 2024. Comparing these two rates, the “real” of the Livret A is therefore largely positive.

This drop in the Livret A rate is therefore bad news for the savings of all French people, especially since 55 million people hold such a booklet. Since the beginning of 2023, the rate has been maintained at 3% and offered an attractive return in a context of high inflation (which sometimes even exceeded 5%). The planned reduction means that savers will see their interest rates decrease, which could affect their long-term savings power.

The good news

However, this development is not without its advantages: the drop in the Livret A rate is part of a broader context of decreasing interest rates. This trend could have positive repercussions on other aspects of the economy, particularly the credit market. Borrowers, particularly those looking to finance a real estate project, will be able to benefit from more advantageous rates on their loans.

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For the social housing sector and local authorities, this reduction in the Livret A rate brings some relief. These players, who borrow at rates based on that of the Livret A, will see their financial costs reduced. Eric Lombard estimates that this reduction could represent a saving of around one billion euros over the year 2025 for these sectors.

Unsurprisingly, the collection of the Livret A and the Livret de développement durable et solidaire has already shown signs of slowing down in 2024. The announced rate reduction could accentuate this trend and potentially encourage savers to turn to other, riskier financial products to seek returns. Life insurance is an option, but so are securities accounts or cryptocurrencies.

Other bad news for some French people: the Livret d'épargne populaire (whose rate has already been reduced from 5% to 4% in August 2024) should also see its rate drop, probably to around 3%. This development could slow down the enthusiasm for this product, which had been very successful in recent years as a shield against inflation for low-income households.

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