The French are still drawing on their savings
Withdrawals from Livret A savings accounts and Livret de développement durable et solidaire (LDDS) accounts exceeded deposits by approximately 70 million euros, according to data released on December 21 by the Caisse des dépôts (CDC).
Contrary to the usual trend in November—which is generally a period of modest savings for the French—the balances in Livret A and LDDS accounts remained stable this month.
In contrast, Livrets d'épargne populaire (LEP) savings accounts posted an increase of 2.8 billion euros, driven by a 6% interest rate and the raising of the deposit limit the previous month.
Specifically, withdrawals from Livret A and LDDS accounts exceeded deposits by approximately 70 million euros, according to data released by the CDC on December 21. The outstanding balance of LEP accounts—an alternative to the Livret A designed for lower-income individuals—increased by 2.8 billion euros, reaching a record high of 66.6 billion euros.
Thanks to a net interest rate of 6% since February 1 (exempt from taxes and social security contributions), this regulated savings product has been a huge success this year, with nearly 18.7 billion euros accumulated since January. Its appeal has been further enhanced since October with the increase in the contribution limit from 7,700 euros to 10,000 euros. Livret A and LDDS accounts have also seen an increase of 36.9 billion euros since the beginning of the year, bringing the total outstanding balance to 546.6 billion euros.
In contrast, euro-denominated funds—a competing product that guarantees principal—saw a significant decline of more than 25 billion euros during the first ten months of the year.
With a net rate of 3%, Livret A savings accounts offer a much higher return than euro-denominated life insurance funds, which yield around 1.59% net after fees and social security contributions, according to calculations by the life insurance information website Good Value for Money. However, insurers and bankers plan to rise to the challenge next year.
