France will keep livret a savings rate the same for next 18 months

THERE ARE MORE THAN 50 MILLION LIVRET A ACCOUNTS IN FRANCE The interest rate of France’s best-known savings account – the Livret A – will continue to provide a 3% interest rate for at least

the next year and a half. The measure was announced by Finance Minister Bruno Le Maire, who said he made the decision for “reasons of national economic interest”. It comes after the Banque

de France also proposed to keep interest rates for the savings account at 3%. The Livret A is a state-regulated, tax-free savings account. The French government sets the interest rate and

deposit ceiling and uses the funds deposited in the Livret A to fund projects such as social housing and urban renewal. The economic model used to calculate the interest rate of the account

– which is seen as a low-risk investment due to the government’s involvement – should have risen to 4.1% as a result of inflation. There are more than 50 million Livret A accounts in France

and savers may see the lower rate increase as harsh amid the high prices in shops. READ MORE: LIVRET A SAVINGS: WHY ARE THEY SO POPULAR? HOW DO I OPEN AN ACCOUNT? TWO REASONS FOR CHOICE Two

main reasons were given for keeping rates at their current levels. The first was the falling inflation levels in France – the Banque de France said a raise now could lead to a large drop

next year, causing volatility for account holders. Secondly, an increase would be “detrimental to economic growth,” with none of France’s European neighbours having an “equivalent” regulated

savings account. HISTORICAL ANALYSIS For an insight into how the Livret A interest rate has shifted over the years take a look at our graphic below: FURTHER ANNOUNCEMENTS MADE The finance

minister did, however, keep the interest rate of the Livret d’épargne at 6% “although it should have been lowered”. This is a savings account for those on modest incomes, which allows them

to save up to €470 per year. The final announcement was regarding _plans épargne logement_ (PELs) or home savings plan loan. Previously, owners had to wait up to four years to use money in

the account to buy a home, but now money from the account can be used “whenever you want” for ecological renovations to a property. Around eight million people have a PEL account in France.

READ MORE FIVE FRENCH ALTERNATIVES TO LEAVING MONEY IN CURRENT ACCOUNTS WHAT DO I DO WITH MY FRENCH LIVRET DE FAMILLE?