UK savers losing out on nearly £18bn thanks to Bank of England's 'monetary experiment'

By Adrian Lowery
British savers struggling with low returns and high inflation are losing nearly £18billion a year thanks to the Bank of England's policies, a report claimed today.
The Bank's monetary policy committee has kept the base rate at a rock-bottom 0.5 per cent for more than three years and that has enabled banks to clamp down on rates paid on deposit accounts.
This has combined with inflation, which has been kept high by the MPC's £325billion quantitative easing programme, to cause a severe decline in the value of the nation's savings.

'Monetary experiment': Some critics feel the Bank of England's quantitative easing programme has kept inflation high, for little benefit

Accountancy network UHY Hacker and Young calculated that Isas are paying an average of 2.6 per cent interest per year – well below the headline inflation rate, which currently stands at 3 per cent but which has been as high as 5.2 per cent.
Two weeks ago, a This is Money Isa report found that while savers can squirrel away up to £5,640 tax-free this tax year, the best three rates vanished just a few months into it.

 

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Meanwhile, the average rate paid to savers has fallen from 6.52 per cent to 2.78 per cent since 2008.
Hence, in real terms, savers are seeing their deposits decline in value month by month, the report said.
By contrast, the report added, the average overdraft rate is up from 18 per cent to 19.5 per cent, while the figure on credit cards is up from 15.73 per cent to 17.32 per cent.
Mark Giddens, partner at UHY Hacker and Young said: 'Savers are losing a staggering amount of money.'
He added that the intervention by central banks to keep interest rates low feeds through to deposit rates and ensures that savers are unlikely to see rates raised in the near future.
There is a lack of big competitors in the market for high-street savers, but Mr Giddens urged people to shop around to get the best rates for their savings.
He said: 'The onus is very much up to the consumer to do their own leg-work and find the best savings for themselves.'
Ros Altmann, director-general of over-50s group Saga, said: 'The Bank of England's policies have been a disaster for savers in general and pensioners in particular.
'Most of those with savings or pensions have seen their income decimated by policies that have tried to help borrowers and banks, at the expense of those who tried to put money aside for their future.'
She added: 'Quantitative Easing (QE) is a massive monetary experiment that has not clearly boosted the economy as intended but instead has boosted inflation and damaged pensions.'

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