The French are shunning the Livret A: why this is good news

The love affair between the French and the livret A may soon be over. After three years of record collection, savers shunned regulated savings accounts in January.

And in unprecedented proportions. The French have deposited only 810 million euros in the Livret A and the Livrets de développement durable et solidaire (LDDS), four times less than in January 2024. On the Livret A alone, barely 350 million euros were collected, the worst month of January since 2016.

A sharp drop after a record December for savings (nearly 4 billion euros collected in savings accounts) and this while January is traditionally the month of saving. The French deposit their Christmas gifts and the possible 13th month received at the end of the year.

If the extent of the fall was surprising, it is easily explained. The yield on the Livret A savings account fell from 3% to 2.4% on February 1st and savers who anticipated the drop went looking for better yields. Like on life insurance for example, which is breaking records. Especially since with the decline in inflation which should remain below 2%, the rate on regulated savings accounts should very probably fall again next summer.

But this drastic drop in collection is perhaps above all a sign heralding an economic recovery. After three years of saving on an unprecedented scale, the French have started consuming again in recent weeks . The trade-off in favor of consumption over savings is synonymous with renewed confidence in the future.

The same goes for household investment in real estate. After three terrible years for the construction industry, this "decline" in savings is a positive signal sent to the sector. Professionals are also anticipating an improvement with a rebound in demand this year .

The colossal cushion of French savers in recent years has been a brake on growth. According to Dorian Roucher, head of the economic situation department at INSEE, "there is a shortfall of 60 billion euros in consumption per year" to return to pre-Covid growth levels.

These tens of billions of euros have been "sleeping" in savings accounts and life insurance contracts for three years.

Because the French people's cushion is still very large. Although net collection declined in January, it still remained positive. The total outstanding amount on livrets A and LDDS beat a new record at nearly 604 billion euros, or 36 billion euros more over a year according to the Caisse des Dépôts. Spent or invested, these billions would have made it possible to generate a few tenths of an additional point of growth.