January 23, 2022

The rate of the livret A “will increase in January”, announces Bruno Le Maire

Enough to embellish the savings of some 54.9 million French people. The livret A, the most popular placement in France, will experience an improvement at the start of the year. The interest rate “will increase in January”, announces Bruno Le Maire this Monday morning at the microphone of BFMTV. “I am making the commitment this morning”, assures the Minister of the Economy and Finance. Without however specifying at what height.

The increase will not quite take place in January as stated on Monday morning. The ministry told AFP that the rate increase will actually be proposed by the government in January, but that the increase will take place on February 1.

According to estimates that Le Parisien revealed to you at the end of November, the interest rate of the livret A could be raised to around 0.7 or 0.8%. It has not left its floor rate, 0.5%, since February 2020.

The governor of the Banque de France François Villeroy de Galhau had for his part already indicated Friday on RTL that the calculation of the rate of the livret A would integrate the inflation of the last six months. “I cannot give you a figure: the governor of the Banque de France will make a proposal,” the minister said on Monday. Asked, the Banque de France was not able to put forward a figure either, the proposal not being officially made to the government until mid-January.

It is however possible to have an estimate by recalling that the rate of remuneration of the Livret A is calculated by making the average between, on the one hand, the average of the inflation rate of the last six months and, on the other hand, the average of the interbank rates, that is, the rates at which banks exchange money in the short term.

The result is then rounded to the nearest tenth of a point, without being able to fall below 0.5%, the current rate. So, with inflation of 2% over the year, according to forecasts, and an interbank rate of around -0.5%, the calculation would result in an interest rate of 0.75%.

A slowdown in net inflows since May

Despite a level of remuneration at the lowest level, the Livret A, which is used in particular to finance social housing in France, has become a safe haven for savers during the health crisis which has seen its outstandings jump. But since May, net inflows have slowed sharply, while consumption has picked up and inflation has picked up.

Bruno Le Maire explained that the fight against the effects of inflation on purchasing power must be based on the following triptych: “protection against the increase in energy prices – 50% of the increase in inflation is that – protection against the increase in the prices of current consumption in the mass distribution and also an increase in remuneration so that people do not lose money in the accounts in which they have placed their savings ”.

Asked about a possible boost for the minimum wage on January 1, the minister replied that “we are the only developed country where the minimum wage is indexed to inflation”.

A favorable environment for savings

This increase in the interest rate is in slight contradiction with the government’s stated objective of reinjecting the record savings accumulated during the health crisis into the French economy. But the presidential election is near, and the political calendar is a game-changer.

This boost should appeal to the many owners of an A booklet in a very uncertain health context, marked by the fifth wave of Covid-19 and the emergence of the Omicron variant. An environment more favorable to savings than to risk-taking and which could keep savings on livret A at a very high level.