Should we (really) be delighted with the upcoming increase in the livret A rate?

The preferred savings rate of the French will soon yield (slightly) more. The Minister of the Economy, Bruno Le Maire, announced the good news for 54.9 million savers on December 13, on BFMTV. “The rate of the livret A will increase in January,” he said, without giving further details. In fact, the executive wants to wait until mid-January for the proposal from the Banque de France and its governor, François Villeroy de Galhau, to make a decision.

A priori, the new rate should be between “0.8 and 1%”, against 0.5% currently, ahead of 20 Minutes Philippe Crevel, director of the Cercle de l’Épargne, a center for studies and information on savings and retirement. But with the rise in prices in recent months, especially in food and energy [les prix à la consommation ont augmenté de 2,8 % sur un an en novembre, après + 2,6 % en octobre, selon l’Insee], will this boost on the A booklet be significant?

“It’s not enough to save”

Historically, despite its plebiscite with the French – especially during periods of successive confinements, synonymous with savings – the livret A is not remunerative. Quite the contrary. “We rather lose money,” says Anne-Sophie Alsif, chief economist at BDO France, specializing in auditing and consulting. We should rather invest in equities, which have the advantage of having higher returns than inflation ”And with the soaring prices, the rate hike in February does not seem“ sufficient to save ”, according to she.

An opinion shared by Philippe Crevel, who points to two major obstacles to the interest of the livret A. First, it “generates significant costs for the Caisse des Dépôts [l’organisme public qui centralise environ 60 % de l’épargne réglementée], because the money market securities which ensure the liquidity of the Livret A are currently remunerated at -0.5%. The state therefore loses money.

The second obstacle is “the hierarchy of rates. The livret A is precautionary savings, and the State wants it not to be more profitable than a long-term product, such as shares. In other words, the objective is to encourage the French to inject their savings into the economy, so this savings should not be too lucrative. However, in October, 343.5 billion euros were held in this book, according to figures from the Caisse des Dépôts. A gold mine.

A hike left to be renewed?

Will this change in the rate from 0.5 to 0.8 or 1% be sufficient? “Some think that inflation will calm down in mid-2022, while others believe that the surge will continue and that wages will follow,” explains Philippe Crevel. In this case, a further increase in the interest rate of the livret A could be considered.

“Everything will indeed depend on inflation, abounds Anne-Sophie Alsif. At BDO, we believe that the situation will still be inflationary next summer and that it will be necessary to wait until 2023 to return to a normal situation in terms of prices, in particular for gas and energy. The State could therefore continue this catching-up effect again next August. “Always with in mind not to make the booklet A too attractive.