The Livret A rate raised to 1% on February 1

Posted on Jan 14, 2022 at 1:10 PMUpdated on Jan 14, 2022 at 7:05 PM

This is a figure that everyone was waiting for impatiently, and in particular savers. The Minister of the Economy, Bruno Le Maire, announced on Friday that the Livret A rate would be raised to 1% on 1er February. A few weeks before the presidential election, this is the first increase since 2011.

“The Livret A rate will drop from 0.5% to 1%, welcomed the minister on the set of the TF1 newspaper. For the People’s Savings Book (LEP), it’s more than a doubling: it will go from 1% to 2.2%, ”he added. The government is thus following the recommendation of the Banque de France, which has taken some liberties with the calculation formula to arrive at this rate.

The subject is eminently political, purchasing power being one of the main concerns of the French. The government has also multiplied the measures in this direction with the energy check, the inflation allowance or the tariff shield aimed at protecting households from the rise in energy prices. In mid-December, Bruno Le Maire had thus assured that the protection of the French against rising prices was his “absolute priority”.

“Electoral gesture”

With the increase in the Livret A to 1%, the government is therefore offering households a new boost in the face of the ravages of inflation, which rose to 2.8% in December. Indeed, by the Banque de France’s own admission, the strict application of the calculation formula developed by the government itself in 2017 “would result in a Livret A rate of 0.8%”. After inflation, however, the real return remains seriously in negative territory…

To arrive at a rate of 1%, the Banque de France applies the formula to its projections by next August, the date of the next revision. To justify its proposal, its governor, François Villeroy de Galhau, specified to AFP that this rate “would be likely to better ensure the remuneration of the holders of the Livret A, without creating an excessive additional cost, in order to preserve the financing of social housing”.

Banks’ concerns

The Caisse des Dépôts indeed finances social housing with the Livret A savings fund. But for Philippe Crevel, president of the Cercle de l’épargne, it is indeed “a small electoral gesture”. According to the Regulated Savings Observatory, the number of French people holding a Livret A account amounts to 54.9 million, which represents more than four out of five French people, he recalls.

This boost is not to the liking of the banks, which must ensure a share of the remuneration of the rate and had “pleaded for a strict application of the formula”, confides a banker. Because this increase will cause, in the short term, “a scissor effect which will not be favorable”, explains this source. “This amounts to making the resource more expensive, even though on the employment side – that is to say the loans granted – the rates will not have changed. »

According to calculations by Fitch Ratings, the increase in the Livret A could indeed cost up to 920 million euros to French banks, or 0.6% of the net banking income (NBI) of the sector. “The banks wanted one thing, the politicians wanted another,” confirms a source familiar with the matter.

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