The Bank of England today announced that the base rate will remain at 0.5% for the 30th consecutive month, meaning savers could have lost more than £43bn in that time. So should we give savers a break?
Those of us with any money left to save will be getting used to the idea that 3% on our cash is the best we can expect to return at the moment.
With cheap borrowing available and high unemployment, should we worry about the nation’s savers or is it more important to continue to try to stimulate the economy?
A survey earlier this week highlighted that there isn’t always correlation between high savings balances and quality of life. So, it’s not just the affluent or those living in nice areas that are suffering. The impact of poor savings rates cuts across demographic boundaries.
Falling in to the savings gap
The problem has been exacerbated by the fact that in the current low-interest rate environment, financial companies are doing little or nothing to let you know about the decent rates that are out there.
When we looked at the ‘savings gap’ at the end of 2010, we found that many companies didn’t put the rates they were providing on statements or in a prominent place on their websites. Many people were floundering in poor-paying accounts, with 25% of accounts paying 0.1% or less and 47% paying 0.5% or less. The savings gap, or the interest people were missing out on, totalled £12bn at the time.
It seemed to us at the time that people were getting the worst of both worlds and providers are in no rush to help us out. Some of the biggest banks are still re-paying the debt to the UK’s taxpayers.
Should we care about the nation’s savers?
There are some loud voices out there standing up for the plight of savers. Save Our Savers campaigns actively for a ‘fair deal for savers’ and hopes to protect savings from ‘devaluation through inflation, unfair legislation and taxation and exploitative financial practices’.
It’s a tricky balance, but does the fact that neither the Bank of England, nor the nation’s financial providers, seem to care about savers verge on discrimination? This issue particularly impacts older savers having to live off the income from the savings that they’ve built up over the years.
Or is it more of a case of accepting where we are in the economic cycle and putting the needs of borrowers, small businesses and the nation’s finances first?