France will use funds in tax-free savings accounts to finance defence

France has introduced a budget bill amendment that permits the redirection of funds from widely-used tax-free savings accounts to support the defence industry, the finance ministry said on Wednesday.

Facing a situation where the government lacks a clear majority, it employed special constitutional powers to pass the spending legislation included in the 2024 budget bill through the lower house of parliament, bypassing a formal vote by lawmakers.

This version of the 2024 budget bill, now approved by the government, paves the way for utilising deposits in widely held Livret A savings accounts to fund the country’s defence industrial infrastructure, according to Reuters.

France President Emmanuel Macron has made a commitment to increasing France’s defence expenditure in the forthcoming years to modernise its armed forces and address emerging security challenges.

France has over 55 million active Livret A accounts, with French banks transferring 60 per cent of the total 400 billion euros in deposits to the public lender Caisse des Depots. These funds are then channeled into various social housing and urban development projects.

However, pressure is growing for the funds to be used for other public projects and the government floated the idea earlier this year of channeling some of the money towards the financing of new nuclear power reactors.

Savers can put nearly 23,000 euros in Livret A accounts, which currently bear a tax-free government-set interest rate of 3 per cent.

With inputs from agencies