Livret A rate slashed to 1.75%

THE interest rate for Livret A savings accounts is to drop to 1.75% on May 1, the lowest ever.

The Socialists have criticised the government’s decision to “attack ordinary people’s savings.”

However the government has insisted it is normal for the rate to be adjusted to account for inflation, which is at its lowest level for 10 years. “Compared to inflation this rate is still a net gain for savers,” said Finance Minister Christine Lagarde.

The interest rate was at 4% last summer and went down to 2.5% in February. Usually it is reviewed twice a year, on February 1 and August 1, but a recent change in the rules allows the government to also make changes taking effect on May 1 and October 1. It is thought the rate may drop as low as 1% in the summer.

The president of the French Association of Bank Users, Serge Maître, said: “The decision conforms to monetarist logic, but it is an unbearable policy. Seventy per cent of users have less than €750 in the account. In this way they are contributing to strangling families’ confidence in the economy, chipping away at their purchasing power.”

The Livret A is the most popular savings account for people in France – it allows for tax-free saving but has a ceiling for how much can be put in of €15,300. It used to be offered only by the Caisse d’Epargne (whose symbol is a squirrel) and Banque Postale but was opened up to other banks at the start of the year.

It has existed since 1818 and 46 million people have one.

PHOTO: AFP/Mychele Daniau