Why the Livret A Will Once Again Become a Safe Bet in 2024
In 2024, the real return on the Livret A savings account is expected to return to positive territory, with the Bank of France projecting inflation of 2.5 percent
Following a sharp decline in deposits in October (-3.7 billion euros), the Livret A savings account ended November with a slight decrease of 280 million euros. The impact of raising the ceiling on the Popular Savings Plan to 10,000 euros is gradually fading. Despite these fluctuations, deposits remain exceptionally strong over the first eleven months of the year, with an increase of +26.68 billion euros for the Livret A and 10.22 billion euros for the LDDS (Sustainable and Solidarity Savings Account). As of the end of November, the outstanding balance of the Livret A stood at 402.1 billion euros, while that of the LDDS reached 144.5 billion euros.
According to Philippe Crevel of the Cercle des Épargnants, the French public’s interest in this investment is expected to remain steady in 2024. He explains: “In 2024, the real return on the Livret A is expected to return to positive territory, with inflation projected at 2.5% by the Banque de France.” By comparison, the real return on the Livret A in 2023 remains negative, with a 12-month gross return of 2.9% (one month at 2% and eleven months at 3%), while inflation is expected to reach 5.7%. In 2024, with the Livret A rate remaining at 3% until February 1, 2025, the real return is expected to turn positive by 0.5 percentage points—a trend not seen since 2020.
The appeal of the Livret A in 2024 is further enhanced by the freeze on its interest rate through February 1, 2025. However, starting in the second half of 2024, the European Central Bank is considering a cut in its key interest rates, which could affect the interest rates on standard savings accounts and time deposits. Despite this, the Livret A and the LDDS should remain competitive, even with anticipated competition from euro-denominated life insurance funds, which are expected to see higher returns.
Another factor in favor of the Livret A is the likely decrease in the Livret d’Épargne Populaire interest rate in February 2024. Although LEP deposits remained strong in November, reaching +2.80 billion euros, they could be impacted by a rate cut scheduled for February 2024, in accordance with the calculation formula based on inflation over the past six months and the Livret A rate, plus 0.5, as per the decree of January 27, 2021.
