French Livret A: Back to 2% soon?

The interest rate on the French Livret A savings account has been 3% since 1 st February 2023. In July 2023, the French Minister of the Economy announced that it w ill remain at this level until January 2025, d eny ing the theoretical formula that should have led to a rise in its remuneration to around 4% by mid-2023. We expect the Livret A rate to fall to 2.5% in February 2025 and to 2.0% in August 2025 , which would lead t he rate to be in line with the theoretical formula. We see no reason why the formula should not be followed (by a quarter of a point), in a context of a significant fall in inflation and an easing of interest rates, while the real interest rate on the Livret A savings account has clearly become positive again. The Livret d’Epagne Populaire (LEP) was a huge success in 2023, with outstanding loans reaching €72 billion at the end of 2023, increasing by 50% over a year. The LEP rate has been 4% since August 2024, above the rate computed with the theoretical formula. We believe that the LEP “ boost ” will continue in 2025, with a rate at 3.5% in February 2025 and 3.0% in August 2025, i.e. 1 pp more than the Livret A rate . In his general policy statement, French Prime Minister Barnier referred to the creation of an industry savings account, which may be launched in early 2025. However, the details of this new product are not known at this stage.