Each year, the government has the possibility of revaluing the Livret A rate four times: February, May, August and November. While next month might have seen the remuneration of the preferred savings investment of the French climb to 3.50%, it will ultimately be nothing.
In an exchange with Le Parisien, the ministry confided that “only the governor of the Banque de France can propose an intermediate revision of the livret A or the LDDS, and only in the event of an exceptional variation in inflation or interest rates. in the short term compared to the date of the previous revision”.
No review in May
Here, “the Governor of the Banque de France has therefore not proposed such an interim revision”. The rate will therefore remain at 3% net per year, a rate that came into effect on February 1st. If the latest figures show a marked deceleration in inflation (with a drop to 5.6% in March), the short-term interbank rates which are also a component of the calculation of the remuneration of the Livret A account tend to increase (1.70% over the last semester).
With this increase, the calculation formula should theoretically bring the Livret A rate to 3.5% net. However, the government had anticipated the sharp rise in rates by declaring last January that it was “desirable that the movements in the Livret A rate remain gradual rather than too volatile”. In one year, however, this savings investment rose from 1% to 3% net, which remains good news for French capital.
Since the pandemic, the government has become accustomed to distancing itself from the strict calculation rule of the Livret A yield. If it should have been negative at a time when market rates were low (in particular in 2020 and 2021) , he might be more generous today. Even last February, when it rose from 2 to 3%, savers might have expected a boost from the state. By limiting itself to the only official formula, the rate of the Livret A should have been increased to 3.3%.
What will be the shortfall in Q2?
To date, the cumulative assets of the Livret A and the LDDS exceed 500 billion euros. In other words, going from 3 to 3.5% on these investments leads to an increase in costs of 2.5 billion euros for the Caisse des dépôts et Consignations and for the banks. In one year, the rate which rose from 1 to 3% has already resulted in an additional cost of 10 billion euros for the latter, which weighs on the financing of the economy.
The funds placed in these two government-regulated savings accounts are used directly to finance social housing and urban policy. It might also be used to finance the French nuclear program to support the local energy mix.
Should we worry regarding the loss of earnings as a holder of a Livret A? In fact, this additional 0.5% would not have changed much in the short term. On a booklet topped with 2,000 euros, the shortfall in the second quarter of the year will be 2.50 euros (2,000 x 0.5% x 3/12). Savers who have however completed their Livret A, reaching the ceiling of 22,950 euros, will have a shortfall of 29 euros over the quarter.
You will then have to wait until August, a more traditional deadline for the revaluation of the Livret A rate, to discover the government’s decision for your savings.