Business banking news review: week ending 4 Apr 2013
Savers have been consistently socking money away for the future in greater numbers, it was recently revealed, yet banks are doing little to help them.
National Savings & Investments, the Government’s savings arm, released its latest quarterly survey on savings activity in the UK, revealing that for the first time in the nine-year history of the quarterly survey UK savers have put aside just over £100 every month. This represented around 8 per cent of the average Brit’s income, NS&I said, and more or less flies in the face of massive cost of living increases and rock-bottom interest rates across the UK.
It turns out that younger Brits have been doing their best to not let the side down when it comes to filling their savings accounts with cash, as the monthly deposit for those between the ages of 25 and 34 reaching 9.3 per cent of their monthly wages. With the economy being what it is, beginning to save early is incredibly important right now, as it could take a very long time to save up enough cash for big-ticket purchases such as a deposit to put towards a mortgage.
Of course, this would be a lot easier if banks and building societies would throw savers a bone, but personal and business bank account providers are notorious for giving their savers a good rogering by keeping interest rates incredibly low. Things have just gotten worse lately thanks to the Funding for Lending scheme, a programme that gives banks access to low-cost wholesale funds in exchange for a promise to drop their lending rates on mortgages and business loans, as the easily accessible Government cash has obviated the need for banks to generate revenue by relying upon savings deposits.
No need for savers means that banks and building societies scale back their interest rates on their savings products, and this leads to savers getting the short end of the stick. Well, things may get worse on that account soon, considering how Chancellor Osborne announced that the Funding for Lending scheme will be expanded through this year and perhaps even further into 2014 and beyond, which is going to positively cripple the nation’s savers even more as inflation continues to mount and wages stagnate thanks to the barely-avoided triple-dip recession.
I understand that the Government is tying to stimulate ‘economic recovery’ by making it dirt cheap to get business loans and mortgages, but I think it’s wrong that in order to do so we need to throw the nation’s savers under the bus like that. Is there anything we can do to change things, though?