Livret A rate rise confirmed

FRANCE'S most popular tax-free savings account, the Livret A, will pay out 1.75% interest from next month after a year of record low rates.

The rise from the current 1.25% brings an end to the worst interest rate in the account's 192-year history.

The Banque de France confirmed this morning that rising consumer price inflation meant the savings rate needed to be revised.

It is only allowed to change the rate four times a year, and the new rate will come into effect on August 1.

Livret A rates are based on an agreed formula linked to consumer prices.

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.

Finance Minister Christine Lagarde told Radio Classique this morning that opening up the account to all banks had been "an extraordinary success".