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Blow to savers as interest rates hit record low of 1%

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Published Date: 06 February 2009
INTEREST rates hit a new low yesterday, after the Bank of England's fifth cut in as many months.
The Bank reduced rates by half a point to 1 per cent – the lowest in its 315-year history – in its first meeting since the UK's slide into recession was confirmed.

While four million homeowners will enjoy lower mortgage rates, savers – who vastly
outnumber borrowers – face yet another fall in their already-dwindling returns. The Building Societies Association, which had campaigned for rates to stay the same, said the cut was an "assault on savers", who had now seen their interest payments drop by 83 per cent since July 2007.

Joe Harris, general-secretary of the National Pensioners Convention, said: "For the five million pensioners with savings, today's cut in interest rates will come as a further attack on their living standards."

Meanwhile, the European Central Bank (ECB) announced eurozone interest rates were to remain at 2 per cent, pushing the pound up to a two-month high of 1.14.

Mark O'Sullivan, trading director at Currencies Direct, said the boost reflected the fact that the pound had already "hit bottom" and investors' dismay at the ECB's reluctance to pull rates down further.





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  • Last Updated: 05 February 2009 10:17 PM
  • Source: The Scotsman
  • Location: Edinburgh
  • Related Topics: Interest rates
 
1

Mcsnagpile,

06/02/2009 08:16:42
The people with savings cannot spend as the value is going down. Whilst people with debt they are encouraging to spend more.
The banks should be nationalised permanently. They must become institutions of trust and respect. In recent years they became patronising, cheeky, greedy, grabbing and threw our hard earned savings around like a man with no arms. To be twenty years saving in a bank and not know the manager is not the way to go. Being brought up in old fashioned business where the customer was known and respected, I will never get used to the fast food financial service and all its up the road diseases and poisoned parcels.
2

The Former Mr. Angry,

Perth 06/02/2009 08:54:09
Upside down logic here with savers being penalised and those careless enough to incur unafforable debt are practically handed hundreds pounds a month on a plate.

The whole basis of the banking system is confidence. This government is not instilling this sense of trust in the banks because it is not insisting on conditions of bailout, including I might add "What bonuses?". The whole rotten infratructure needs to be taken apart and rebuilt to satisfy basic demands for banking which includes lending and offering a reasonable rate of return on investments. All the other shenanigans can be safely thrown out, including the idea that head bankers are "special" and need bonuses to attract the best talents.

Well if what they got before was the "best" they can take a hike.
3

Dave From Barra,

Western Isles 06/02/2009 09:01:59
1 and 2 - agreed.

The Chinese have a culture of saving and accruing wealth and thier economy is robust enough that America and much of Europe have turned to them for support.

Unfortunately we here and in europe took on the American model of personal economics - have now pay later....forever.

I favour the Chinese model. Have 2 bucks but only need to spend one, bank the other.

(As apposed to, have 2 bucks, spend them, borrow another 2 bucks which costs 3 bucks to pay back and borrow more to cover the borrowings all so you can buy a piece of electronic shoite that doesn't enhance your life in anyway at all).

 

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