Posted on Nov 23, 2021, 6:21 PMUpdated Nov 23, 2021, 7:00 PM
Without warning, inflation has entered the political debate. And it will undoubtedly have an effect on the Livret A rate. According to figures from the Caisse des Dépôts published on Tuesday, the French withdrew 3.4 billion euros from their Livret A and sustainable development and solidarity booklets (LDDS ) in October.
If October is traditionally a month of outflows, it is impossible to say if this is already a response to the rise in prices, which undermines the return of 0.5% of these savings products very popular with the French. With inflation at 2.6% in October, their real return is -2.1% …
Faced with a situation that is set to last, savers risk demanding a revaluation of the rate of remuneration. “I do not see how the government could do otherwise during an election period,” said Gilles Carrez, MP Les Républicains, member of the finance committee.
At the end of September, the Minister of the Economy, Bruno Le Maire, had ruled out any increase in the short-term rate, but had promised to take stock “in November” on the level of inflation. Contacted, Bercy recalls today that the law stipulates that a change in the rate cannot take place before next February, after the calculation carried out by the Banque de France on January 15. Be that as it may, a spokesperson for the minister confirms to “Echoes” Bercy’s desire to “respect the formula”.
Towards a remuneration of 0.8%?
Reformed in 2018, the Livret A rate calculation formula results from the average between the average level of inflation (over the last six months) and that of the short-term interbank rate.
Since July, inflation has gradually fallen from 1.1% to 2.6%. If this dynamic continues, its average level over six months will therefore exceed 2% in January. If the interbank rate stabilizes at 0.57%, the rate of return on the Livret A should therefore be revalued to around 0.8%.
The subject is particularly politically sensitive. To protect the returns of savers, the government had also set, when defining the new formula, a floor rate of 0.5% below which the rate of the livret A cannot drop. Without it, it should have fallen to 0.375%. Inflation was then barely above 1% and the interbank rate at -0.35%.
The question will be all the more necessary as the outstanding amount of Livret A and LDDS is reaching peaks, inflated by forced savings linked to confinements. Despite the October outflow, the French have placed 20.64 billion in their guaranteed passbooks since the start of the year. Already the fourth best year since 2009.
Faced with the uncertainties that persist, in particular with the arrival of a fifth wave of Covid-19, this situation could continue. “The yield is of less concern to the French than the safety of this guaranteed investment,” said Gilles Carrez.