Livret A ceiling will rise 25%

The Livret A is France’s most popular savings plan

People will shortly be able to invest up to €19,125 in the tax-free accounts, with another 25% increase later on

THE investment ceiling of the most popular French bank account, the Livret A, is about to be raised by 25% - a watered-down version of a campaign promise to double it.

The ceiling for the tax and social charges-free account will rise from €15,300 to €19,125 in the next few weeks, and the ceiling for the similar LDD account will double, from €6,000 to €12,000.

A second rise of 25% for the Livret A has been promised by the end of the year, though announcing it, Economy Minister Pierre Moscovici did not clarify if this was 25% of the original level or on top of the first 25% rise (meaning either a final level of €22,950 or €23,906).

Further rises can be expected at later, unspecified dates, and the government insists the promised doubling will happen, but “progressively”.

The increase will benefit individuals and families, who will be able to save more money tax-free, for example towards a deposit on a house, as well as benefiting the social housing sector, in which funds placed in Livret As are invested. Livret As currently have a 2.25% interest rate (which can vary according to a formula relating to economic factors).

However the move has been criticised both by those who accuse the government of backsliding on promises (President Hollande had spoken of a doubling from this summer, to €30,600) and critics who say it will be bad for the economy.

The latter have said money is not lacking for social housing – building is rather being held up due to lack of suitable land.

The banking lobby, in particular, pressed for no raise to the ceiling, due to concerns that, for example, fewer people would invest in their own, ordinary, savings accounts, which are taxed. It is thought pressure from banks is likely to have caused the government to abandon its initial doubling plan.

The Fédération Bancaire Française said the move would “have a negative impact on the ability of the banks to finance the economy... just as a new European directive has imposed on us the need to have more liquid assets so as to continue to give credit to the public and businesses.”

Ex-Budget Minister Valérie Pécresse (UMP) called it an “anti-business” measure, because she said fewer people would invest in shares.

More investment in the Livret A is also likely to come at the expense of use of assurance vie schemes, which have already been suffering (more money was taken out of them than put in this year), a taxed savings option which is aimed at long-term investment and which helps finance business and the state.

State finance watchdog the Cour des Comptes recently suggested offsetting the loss of tax and charges revenue which will result from the Livret A raise by levying social charges on interest over and above that generated by money invested up to the current ceiling – an idea the government has not ruled out.

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