End in sight for low savings rate

INTEREST rates on France's most popular tax-free savings account look set to rise in August for the first time in two years.

According to Les Echos, growing inflation means it is likely that the Livret A rate will be increased to 1.5% or 1.75% in August.

The rise from the current 1.25% is quite small but will be significant, as it spells the end of the account's lowest interest rate in its 192-year history.

Livret A rates are based on an agreed formula linked to consumer prices - and inflation in April was around 1.6%.

The rate can be revised once every three months - the next meeting is in July. If a rise is approved, it will come into force in August.

About 46 million people in France own a Livret A. The savings scheme has existed since 1818 and allows people to save up to €15,300, with interest paid tax-free.

It used to be offered only by the Caisse d’Epargne and Banque Postale but was opened up to other banks at the start of last year.

The amount paid to savers has fallen by more than two-thirds since August 2008, when it stood at 4%.