Livret A: why households continue to prefer risk-free savings

According to initial estimates, French households opted massively for risk-free savings in 2021, just as they did in 2020. The various regulated savings passbooks, starting with the Livret A, were favored by savers, who also kept their savings in current accounts. Behavior is expected to remain the same in 2022. Here are some explanations.

Savings: French households reluctant to take risks

Despite low rates of return, the French have preferred to invest their savings in regulated passbook accounts, notably the Livret A, in the interests of security. According to forecasts by the economic analysis firm Pair Conseil, the increase in these so-called balance sheet savings should be 105.7 billion euros, out of a total of 172 billion euros saved in 2021.

Accelerating inflation is unlikely to change this. According to a study by the Banque de France published on December 13, 2021, fewer than one in five French people are prepared to take risks when investing their money.

Even if long-term equities are more profitable than other forms of investment, households were already favouring balance sheet savings before the health crisis, for fear of risk and the attraction of liquidity. In 2019, bank deposits accounted for 69% of savings.

Current accounts, tax-regulated passbooks and regulated passbooks

In 2021, according to estimates by Pair Conseil, the majority of household savings will be deposited in current accounts, with an inflow of +56 billion euros. Tax-sheltered passbook savings accounts come second, with +29.4 billion euros, followed by the Livret A and the Livret de développement durable et solidaire, with +16.5 billion euros and +4.9 billion euros respectively.

Tax-sheltered passbooks are ahead of regulated passbooks. But why? As the Conseil d'analyse économique revealed at the start of 2021, the surplus savings accumulated during the health crisis came mainly from the wealthiest households.

By the end of 2020, half of this surplus savings had been accumulated by the richest 10% of French households. Extend this to the wealthiest 20% of households, and you get 70% of the surplus savings, while the lowest 20% had not saved at all.

For the most privileged households, who have therefore accumulated most of their surplus savings, regulated passbook savings accounts have reached their ceiling, and the surplus must be transferred to tax-regulated passbook savings accounts, which explains their position in the ranking drawn up by Pair Conseil.

These tax-sheltered passbook savings accounts have an average rate of 0.09% gross, from which 30% is deducted for flat tax, bringing their yield to 0.063%. Commercial operations regularly boost rates, although they tend to be rare.

Despite these occasional increases, over the long term, tax-regulated savings accounts are less profitable than the Livret A. Its rate of 0.50% will be raised from February 1, in line with inflation. It should rise to 0.9%. As for the Livret d'épargne populaire, its rate should exceed 2% from February 1.