There was a time, not so long ago, when having some cash in the bank earning a reasonable level of interest was considered quite a smart thing to be doing, particularly since you could be pretty certain that your capital was safe. But that was before the 2008 financial crisis and interest rates fell through the floor – not just in the UK, but globally. Your money remains in a secure place, but you are likely to be earning next to nothing in real terms.
The problem is so severe in some parts of the world – Japan, for example – that you have to pay a bank to look after your cash because interest rates are negative. Closer to home, in France, where the equivalent to what we call Base Rate is 0%, the very best rate of interest you can hope to receive on your savings is 1.75%; or 0.75% if you want to retain reasonable access to your money.
If you take into account the fact that inflation in France is running at around 0.6% – not too bad, in European terms – it means that de facto savers are earning zilch. And if you factor in that their powerful neighbours, Germany, on which France depends for so much of its trade exports, have inflation running at 1.7%, it is inevitable that some of that inflation will be imported, reducing the actual return to less than zilch.
It would not take a massive leap of imagination to see that inflationary pressures are likely to increase, particularly if members of OPEC decide to restrict oil production and the global price goes through the roof as a result. To add to the gloomy outlook you have Marine Le Pen threatening to destabilise the whole political scene in France, with some commentators already speculating about the possibility of ‘FREXIT’.
All in all, it is probably not a great time to be sitting on a pile of cash in France, particularly if you rely on the interest generated to supplement your income. But if, as a French citizen, you cast your eyes across the English Channel you will see straight away that, because of the fall in the value of sterling since Brexit, investments in the UK are c12% cheaper than they were, say, six months ago. You will also see that returns of 6% or more, combined with reasonable security, are freely available through P2P loans. And if you look at ArchOver’s ‘Secured and Insured’ proposition – made possible with the help of Coface, an established French institution – you might just see the answer to your prayers. Let us hope so.