The Bank of England’s decision at the end of last week to hold interest rates at 0.5% for the 12th consecutive month means that the average saver is now £600 worse off than they were this time last year.
In March 2009, the Bank of England’s governor, Mervyn King, cut the base rate from 1% to 0.5% in order to reduce the impact of the recession. However, Britain was one of the last major economies to emerge from recession, growing by just 0.3% in the last quarter of 2009.
Currently, there are no easy-access
savings accounts paying a rate that beats inflation. A spokesperson for the campaign group Save Our Savers, said returns on
savings accounts were “pitiful”.
According to research from financial information firm Moneyfacts, a basic rate taxpayer needs a
savings account interest rate of at least 4.38% to make sure that their money is not eaten away by inflation, which is currently 3.5%. The firm has advised that anybody who wants to get an interest rate which beats inflation has invest in a fixed term
savings account of at least three years.
