Livret A at 6% in 1985: could the scenario happen again?

Will they find their favorite savings product? French women and men, who have a very singular affection for the Livret A, could well start putting money aside again, despite the high inflation the country has been facing in recent months. The latter, informs the daily Les Echos on its site, should permanently settle at more than 6.5% in the weeks to come. This is enough to worry most of the nation: this implies a significant loss of purchasing capacity caused by the erosion of the power of savings and by the rise in consumer prices for most of the foodstuffs which may be fond – if not addicted! – one and the other. Gasoline, energy or food are just some of the products concerned, as Planet has already explained in the past.

However, if the Livret A could once again attract savers, it is because Bruno Le Maire has confirmed the revaluation of his rate of remuneration. Currently set at 1%, significantly less than inflation. Shortly, from August 1, it will therefore drop to 2%, informs Le Parisien on its site. “In the current situation, no other product (than the Livret A) offers as much security. The investment is guaranteed and the interest is tax-exempt”, declared the Minister of the Economy, in the columns of the daily Ile-de-France.

The Livret A, recalls the economist Philippe Crevel in our columns, has never been a particularly profitable product. “That’s not the goal,” continues the director of Cercle de l’Epargne, for whom such a product does not necessarily need to be profitable. “It is a short-term, precautionary savings product. It aims above all to guarantee the security and liquidity of the sums that are invested… and in this respect, there is no better on the market”, he explains again.

In fact, however, it has already happened that the Livret A is profitable, still informs Le Parisien. He even stayed that way for quite a long time.

There was a time, the Livret A even paid more than 6%, as explained by the Ile-de-France daily on its site. This was the case, in particular, in 1985.

“In fact, the rate of return on the Livret A even rose higher during the 1980s. It rose to around 8.5%. However, it is also important to remember that inflation rose to 13%. Its real return was negative at the time,” recalls Philippe Crevel. Could such a situation happen again? Not necessarily, continues the expert.

“The Livret A rate today depends on a number of factors, including two other values: inflation and market money rates. The latter remaining quite weak today, they pull the yield of the Livret A down”, he specifies again.

With inflation around 6 or 6.5%, it goes without saying that the Livret A, even with a rate of return revalued to 2%, is not enough to preserve the finances of savers. “It is always more useful to put your money in a Livret A than in a bank account, because 2% is better than 0%. But the return remains negative”, observes Philippe Crevel.

In this case, he argues, we will have to take a little risk: “To hope for any return, we will have to go to the stock market. It is a good time to invest, precisely because these are falling and therefore cost less at this time. There is no better way to make, in the long term, a significant added value”, he explains. “The PEA or unit-linked life insurance are two of the envelopes that make it possible to invest in these markets.