MONEY – The 55 million French people holding a Livret A will be able to benefit from an increase in its rate from February 1, which will double to 1%, Bruno Le Maire announced on Friday. A significant revaluation in this period of very high inflation, but which still remains limited in the face of rising prices.
ML | TF1 report E. Despatureaux – P. Marcellin –
This is the preferred investment of the French: more than four out of five people have a Livret A in France, a refuge investment particularly in demand during the health crisis. And it will now bring in a little more this year. “The Livret A rate will double on February 1”, going from 0.5% to 1%, announced on the 13H set of TF1 on Friday January 14 the Minister of the Economy Bruno Le Maire.
You will thus receive double the remuneration of your booklet this year: if you have for example 5500 euros in your account, you will receive 55 euros, against 27.50 euros previously. The ministerial cabinet chose to follow the recommendations made earlier in the day by the Banque de France, in charge of calculating these rates. A revaluation at 1% “would be likely to better ensure the remuneration of the holders of the Livret A, without creating too high an additional cost, in order to preserve the financing of social housing”, said the governor in a press release.
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This increase is unprecedented: the last revaluation of the Livret A dates back almost 11 years, notes the study center Le Cercle de l’Épargne on his site. In August 2011, its rate rose to 2.25%, before it collapsed until reaching its all-time low in February 2020, at 0.5%, and has stagnated there since. This slight recovery in remuneration announced by Bruno Le Maire is however far from the record of 8.50% recorded in 1981, and remains lower than the rate of inflation. So is saving on such a booklet a good deal?
An increase that remains out of step with the inflation figures
This measure was intended to respond to the recent price increase, since the rate of remuneration of the Livret A is calculated based on the average inflation rate of the last six months and on money market rates. But this inflation is much higher than this new remuneration, even revalued. Consumer prices rose 2.8% in December and November, INSEE said on Friday, their highest level since 2008.
Before Bruno Le Maire’s announcement, economists had already forecast a close figure: 0.8%. “It’s still a very low salary”, regretted Maël Bernier, spokesperson for the site Meilleurtaux.com, in the report of the 8 p.m. of TF1 at the head of the article, shot before the announcements of the Minister of the Economy. “Despite the rise in its rate, the real return, after taking inflation into account, remains negative”, abound the specialists of the Cercle de l’Epargne.
“I am convinced that by the end of 2022, this inflation will decrease, we are now at its peak. This is the time when it is the most difficult and when we act”, tried to reassure the minister. In a press release, the Banque de France confirms that it expects “a drop in inflation below 2% by the end of 2022”.
If this increase is limited, it is also to limit the impact on social housing: “The Livret A is used to remunerate the savings of the French, but also to finance social housing, and we are all attached to it. It is important that it can be financed under good conditions”, added Bruno Le Maire. The more the rate rises, the more this sector is weakened because the loans granted to them by the public body of the Caisse des dépôts (which remunerates 60% of the money collected on this booklet) are logically more expensive. The Cercle de l’Épargne notes that the cost of this revaluation of the Livret A for the public bank and the others is already estimated at 1.7 billion euros.
More than a return, savers are looking for “security and liquidity”
But until then, despite these unattractive rates, savers continued to favor this investment: as of December 31, 2020, 55.7 million French people owned one, and its outstanding amount climbed on November 30, 2021 to 343 billion euros, reports the study center. This booklet was particularly in demand during the health crisis, since the collection from March 2020 to November 2021 reached 38 billion euros.
The Circle of Savings now predicts a “rise for two to three months” collection, a frequent phenomenon after the announcement of a revaluation of the booklet. But the holders of Livret A do not seem attracted by its remuneration. According to the specialists of the Cercle de l’Épargne, if savers “put more money aside” during periods of inflation, “in order to compensate for the loss of yield caused by the rise in prices”, they do not seek to maximize their interests.
“The low Livret A rates did not deter French savers. Their objective was not the search for a return but security and liquidity”, they explain. The number one asset of the Livret A is indeed to be able to withdraw funds from it as soon as you wish. “It’s a security in case of a hard blow”, underlines a passer-by in the TF1 report. “I lost my job, so I’m in a moment where I’m taking advantage of this savings”, says another.
The Livret d’Épargne Populaire remuneration “rises to more than double that of the livret A”
Which investment should be preferred, for a better return? The sustainable and solidarity development booklet will also increase to 1%, announced Bruno Le Maire. But above all, the People’s Savings Book (LEP) will be revalued to 2.2%, against 1% today, closer to the rate of inflation. An investment capped at 7700 euros and accessible according to their level of income: “All French people who earn less than 20,000 euros per year are entitled to it”, he recalled. For example, a couple with a child is eligible if they do not receive more than 2500 euros per month.
This placement is however much less requested by the French: only 7 million people have one, out of the 15 million eligible. Additionally, this product “records an outflow for ten years”, deplores the Circle of Savings. “It’s a shame, because his remuneration is more than double that of the booklet A”, insisted Bruno Le Maire, praising“a passbook that better protects them against inflation”. He asked the banks to make it “the promotion” with their clients and announced that the General Directorate of Public Finances will send “in the next few days” an email to eligible people who have not yet opened an account.
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In addition, it is also possible to invest in the stock market. “To have a little return with your savings, you have to accept to take risk and have a savings plan in shares”, advises Philippe Crevel, economist and director of Cercle de l’Épargne. But these shares follow the course of the Stock Exchange, and can therefore lead to loss of money. The less risky retirement savings plan and life insurance are still popular, but there is no silver bullet. To choose the best investment, two questions must be asked: how much can it bring me and how much money can be blocked.
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