Law professor Paul Cassia had been optimistic about the possibility of a revaluation of the interest rate. However, his appeal to the Council of State for the cancellation of the Livret A rate freeze at 3% was rejected on Monday.
Cassia, a professor at Panthéon-Sorbonne University, had lodged multiple requests with the highest French administrative court since July 13, 2023. These were in response to the announcement by the Minister of the Economy, Bruno Le Maire, that the Livret A rate would remain at 3% from August 2023 to January 2025.
Typically, the reward rate for the roughly 56 million Livrets A, similar to the 24.8 million Livrets de développement durable et solidaire (LDDS), was reviewed every six months by the Banque de France and then approved by Bercy. This rate is determined by a calculation that considers half the inflation of the previous six months and half an exchange rate between banks.
For the period from August 2023 to January 2024, this operation yields a rate of 4.1%, and 3.9% between February 2024 and July 2024. It is expected to remain above 3% for the final third of the period, from August 2024 to January 2025 (the exact figure will be known in mid-July). Contrary to Bruno Le Maire’s announcement of “good news” for the French public, the 3% freeze is largely unfavorable for them, resulting in over 6 billion euros less in reward since an initial downward adjustment at the start of 2023.
The Council of State affirmed the minister’s authority to make such a decision and approved the “exceptional circumstances” rationale presented by the Bank of France to justify the move.
The primary justification for freezing the rate is the protection of social housing financiers, who borrow from the Caisse des Dépôts (CDC) at the Livret A rate. These entities, however, have a lenient lender and manage their debts long-term, typically over a 40-year period. This duration naturally involves fluctuations in rates.
The rate freeze also benefits banks, which pay a portion of the interest, and minimizes the impact on insurers who struggle to match the rewards of their euro funds with those of regulated savings.
