Livret A savers are losing money
Interest rate stays stuck at 1.25% - lower than inflation - which means savings are gradually losing their value
THE INTEREST rate paid on France's most popular tax-free savings account, the Livret A, has been held at 1.25% until at least August.
The Banque de France said it could not justify increasing the rate yet, even though its calculations suggested that the amount paid should be raised to 1.75% to account for inflation.
The 1.25% rate is the lowest in the savings account's history and has been in place since last August. It means savings held in a Livret A are losing their value in real terms, as consumer price inflation is in the region of 1.5%.
The amount paid to savers has fallen by more than two-thirds since February last year, when it stood at 4%.
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 a month later.
Despite the low rate, savers are continuing to sign up. Some €186.7bn was deposited in Livret A accounts in February, up 13% on December last year.
About 46 million people in France own one. 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.
Sean Prior - Fotolia.com
