The year 2025 promises to be a year of change for French savers. The Livret A rate, which is a flagship savings product in France, should see a drop on February 1.
The general director of Caisse des Dépôts, Eric Lombard, announced that the rate could increase from 3% gross currently to around 2.5%. This downward revision is due to the decline in inflation, which rose to 1.2% in October 2024. By comparing these two rates, the “real” return on 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 of them hold such a livret. Since the start of 2023, the rate has been maintained at 3% and offered attractive remuneration in a context of high inflation (which sometimes even exceeded 5%). The planned reduction means savers will see their interest payments fall, which could affect their saving power in the long term.
The good news
However, this development is not without advantages: the reduction in the Livret A rate is part of a broader context of falling interest rates. This trend could have positive implications for other aspects of the economy, notably the credit market. Borrowers, in particular those looking to finance a real estate project, will be able to benefit from more advantageous rates on their loans.
For the social housing sector and local authoritiesthis 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 Sustainable and Solidarity Development Booklet has already shown signs of slowing down in 2024. The announced drop in the rate could accentuate this trend and potentially encourage savers to turn to other financial products – more risky, to seek returns. Life insurance is an option, but also securities accounts or cryptocurrencies.
Other bad news for some French people: the Popular Savings Account (the rate of which has already been reduced from 5% to 4% in August 2024) should also see its rate drop, probably around 3%. This development could dampen the enthusiasm for this product, which had enjoyed great success in recent years as a shield against inflation for low-income households.
