PARIS (Reuters) - The French government aims to freeze the rate on popular tax-free savings accounts at currently historic lows for two years, L’Opinion newspaper reported on Tuesday.
The rate of so-called Livret A accounts is set twice a year by the Finance Ministry, almost always following a central bank recommendation based on the most recent inflation and money market rates.
Because a saver can put nearly 23,000 euros ($27,444) in such accounts without paying taxes on the interest, they are hugely popular.
Banks pass on much of the vast sums deposited in such accounts to the Caisse des Depots public-sector lender, which uses it to lend to social housing bodies.
L’Opinion reported on its website that the government aimed to hold the rate steady on Livret A as a way to give favorable financing conditions to social housing bodies as compensation for requiring them to cut rents.
Rents would in turn be reduced to help tenants cope with a planned reduction in housing allowances by as much as 50 euros per month per beneficiary, L’Opinion reported citing a source close to the matter.
The government took serious flack this summer when it went ahead with a planned five-euro cut in the widely enjoyed but costly benefit.
Along with transport and subsidized jobs schemes, public spending on housing is one of the three priority areas for cutting state spending next year by 10 billion euros.
Reporting by Leigh Thomas; Additional reporting by Yann Le Guernigou