Bank of England does its best to mangle economic recovery

Business banking news review: week ending 22 Aug 2013

Because British savers haven’t had enough headaches lately, the Bank of England has chosen to meddle in our economic recovery yet once more.

A Bank representative said that, due to the still abysmal economic situation in the UK, there are still many stimulus measures that may be implemented. One of these brilliant ideas is to refuse to raise interest rates yet again, despite the fact that record-low rates have wreaked havoc with the nation’s return rates on savings accounts.

Of course the Bank doesn’t care about the state of our savings, considering how they’ve gone out of the way to try to encourage the mortgage and business loans markets. Measures such as the Funding for Lending scheme have absolutely backfired, as banks that are given access to ultra low-cost credit have no reason to remain competitive on the interest rates they offer to their savings customers, which I find absolutely infuriating!

Of course, things are going to get much worse thanks to several Bank policies that are going into effect over the next three years. I discovered this week that, in addition to the Bank ‘not ruling out’ any more stimulus measures, it will strip some £33 billion from savers’ coffers thanks to an absolutely wrong-headed decision to do little to nothing to rein in inflation.

Industry experts say that, thanks to the Bank’s policies as they stand right now, we’ll be lucky to see inflation fall to a level that would see savers actually see an effective return on their investments any sooner than 2016. This is, of course, because that when inflation is higher than the interest rate on your fixed rate bond, for example, you’re not actually earning any money – if you get a 2 per cent return on your investment but inflation is 3 per cent, your money is worth one per cent less than it than the day you deposited it.

How’s that for a kick in the bollocks? If you ask me, the Bank is so obsessed with lifting us out of this economic slump that they’re willing to do it at any cost – including the destruction of our collective savings. Let’s not forget that inflation – increases to the cost of living – makes things like the price of your fruit and veg higher as well, and with wages not keeping up either you’ll be harder and harder pressed to keep up with your expenses as time goes by!

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