No good news for savers or small business owners looking for finance

Business banking news review: week ending 30th Aug 2012:

It’s bad news all over this week, as small business owners looking for finance and personal banking customers trying to make their savings pots grow are both hung out to dry by the UK banking industry yet again.

It’s kind of been an open secret that small business bank account holders have been pushed around by their banks for years when it comes to trying to secure business loans. Banks and building societies kind of wink and nod, saying, ‘oh there’s no demand for our services, that’s why we’re not lending,’ while the huddled masses of SME owners are trying to raise working capital to expand their business by rubbing two pence together in the hopes that they’ll reproduce.

Well, it might be time for financial service providers to stop lying through their teeth, as a recent survey found that less than one out of every 10 SMEs walk out of their local branch with a business loan. It’s hard to argue with a survey of over 1,000 businesses, but we’re sure the banking industry will try anyway, considering they’ve been caught red-handed and need to spin a pretty little story before all the irate villagers with torches and pitchforks burn High Street down to the ground.

Of course, that crowd of irate peasants won’t just be composed of small business owners – personal banking customers are getting abused badly as well. The interest rates on savings products in the UK are absolutely abysmal, especially compared to how they were just a few short years ago before the credit crisis.

Index-linked easy access savers are especially terrible since they go off the Bank of England’s base rate, and we all know how long that’s been languishing at a subterranean 0.5 per cent for nearly four years now. The results have been catastrophic, with banks and building societies slashing their rates to match the BoE’s substandard one, leading to, in one instance, a 6.26 per cent interest rate deal from Manchester Building Society plummeting to only one-half a percentage point in five short years.

The rate is so bad it’s absolutely laughable. It’s not even above the inflation rate, which means that the longer you keep your money in there, the less it’s worth, thanks to the erosive affects of the constantly rising cost of living; it’s enough to drive you mad in an environment where the economy is already teetering on the edge of mediocrity.

Of course, there are rumours that the Bank of England will be dropping another 0.25 percentage points by the end of the year. Isn’t life grand?

 

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