Livret A Rate Drops 29% to 1.7% Impacting 55 Million Savers

The Livret A rate, a popular savings option in France, is set to decrease from 2.4% to 1.7% starting August 1, 2025. This reduction, the largest since 2009, is in line with the regulatory formula and has been validated by the Banque de France. The formula takes into account the half-year average inflation, excluding tobacco, and the interbank interest rate in the Eurozone. The government's decision to lower the rate is driven by the decrease in inflation to 0.88% in the first half of the year, which aligns with the regulatory requirements.

This change will impact over 55 million people who hold Livret A accounts, which collectively hold over 444 billion euros as of May 2025. The reduction in the Livret A rate is part of a broader economic strategy aimed at reducing the debt burden of social housing organizations. By lowering the financing cost, the government hopes to stimulate investments in the social housing sector without increasing its own public debt. This move is seen as a budgetary lever to support economic recovery by easing credit constraints for social landlords and indirectly reducing costs for small and medium-sized enterprises (SMEs).

However, the decrease in the Livret A rate raises concerns about the profitability of regulated savings and the future choices of savers. While the 1.7% rate remains above current inflation, the rapid fall in the rate could weaken savers' confidence. This could lead to a shift in savings strategies, with savers exploring more dynamic or alternative products. Bitcoin and cryptocurrencies, despite their volatility, are gaining visibility among young professionals seeking higher yields. This trend could reshape the French financial landscape, where traditional products may struggle to compete with digitally evolving assets driven by scarcity and monetary innovation.

In the medium term, if inflation rises again or if savings returns remain persistently below market standards, savings flows could shift to other vehicles such as life insurance, real estate investment trusts (SCPI), or even cryptocurrencies for more experienced profiles. The government's decision to lower the Livret A rate highlights the fragility of regulated savings' remuneration against macroeconomic changes and the state's desire to maintain the transparency of the system, despite potentially negative effects on savers' purchasing power.