Savers lose out on £44.5bn as Bank Rate stays at 0.5pc Savers lose out on £44.5bn as Bank Rate stays at 0.5pc
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    Default Savers lose out on £44.5bn as Bank Rate stays at 0.5pc

    Saver our Savers, the campaign group, claims that Britain's savers are losing out on £44.5bn because of the gulf between inflation and Bank Rate, which continues to languish at 0.5pc. The campaigners said that they calculated the figure using official Bank of England figures.

    Simon Rose, spokesman for Save Our Savers said: "It is unfair: to confiscate £44.5 billion annually from savers and pensioners and transfer it to those in debt; to penalise those who have struggled to put something by in order to support those who ran up debts and caused this financial crisis; to reward debt and penalise savings."

    The Bank of England also said that the Bank's quantitative easing (QE) programme would remain at £275 billion following the increase of £75 billion in October. The no-change decision came despite a call from the British Chambers of Commerce to increase its support with a £50 billion top-up to QE, following October's shock increase.

    But the Bank opted not to move yet as it waits for a clearer picture of how the economy fared in the final quarter of 2011 following mixed recent data.

    Fears intensified that the economy might have slipped into reverse in the fourth quarter of 2011, after Office for National Statistics figures revealed industrial production declined by 0.6pc in November, following a 1pc fall in October. Manufacturing output fell 0.2pc in November although its decline was at a lower rate than the previous month.

    There have also been recent signs that the economy improved slightly in December, with industry surveys coming in stronger than expected. Growth in the powerhouse services sector, which makes up 75pc of the UK economy, is likely to have saved the wider economy from contraction in the final quarter, while surveys reported growth in manufacturing and construction.

    But the crisis in the eurozone – which the Bank cited as one of the key threats to UK recovery – continues to rumble on as EU leaders are yet to deliver a concrete plan to resolve the region's problems. Economists still expect a further £50 billion of QE from the Bank of England in both the first and second quarters of this year, taking the total up to £375 billion.

    Source: Savers lose out on £44.5bn as Bank Rate stays at 0.5pc - Telegraph

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    What's £44.5 bln?

    That's 50% more than High Speed 2 will cost over 20 years building it up to Manchester and Leeds.

    That's equivalent to around 10% in rate of VAT (ie it would need to go to 30% to steal same amount of money).

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    Of course it's a gross injustice to punish savers and reward reckless people who've run up large debts. That's what's happening under the current (low-interest-rate + high-inflation) economy.

    As others have said, the powers-that-be are doing everything they can to keep the property bubble inflated.

    However, nobody is above the market (not even governments), and sooner or later it will probably blow-up in their faces (metaphorically speaking!). Or to put it another way: an unsustainable situation cannot be sustained.

    A return to basic common-sense management of the economy is long, long, long overdue.
    Low interest rates damage the economy in the long run.

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    Who exactly is going to "save" them?

    Nobody (not even the govt or the BoE) can force banks to pay a particular interest rate on savings. If they did, banks would just stop offering savings accounts.

    Same as nobody can force banks to lend at a particular rate, as many have learned to their cost recently.
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    Quote Originally Posted by Freamon View Post
    Nobody (not even the govt or the BoE) can force banks to pay a particular interest rate on savings.
    Banks don't offer more money on savings accounts precisely because BoE would lend at 0.5% using tulip paper banks own as collateral.

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    Quote Originally Posted by AtW View Post
    Banks don't offer more money on savings accounts precisely because BoE would lend at 0.5% using tulip paper banks own as collateral.
    But savings accounts don't require any collateral at all?
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    Quote Originally Posted by Freamon View Post
    But savings accounts don't require any collateral at all?
    From savers point of view collateral is FSA guarantee of deposits up to whatever value it is now (£50k?).

    From banks point of view they get full cash upfront, the word "collateral" is meaningless in this case as there is no risk.

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    Why have they lost £45billion exactly????
    What happens in General, stays in General.
    You know what they say about assumptions!

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    Quote Originally Posted by MarillionFan View Post
    Why have they lost £45billion exactly????
    A question a child might ask, but not a childish question.

    I'd answer it but I don't think you'd understand.

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    Quote Originally Posted by AtW View Post
    A question a child might ask, but not a childish question.

    I'd answer it but I don't think you'd understand.
    I get 5% on my savings. Maybe they should come to me.
    What happens in General, stays in General.
    You know what they say about assumptions!

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    Quote Originally Posted by AtW View Post
    From savers point of view collateral is FSA guarantee of deposits up to whatever value it is now (£50k?).

    From banks point of view they get full cash upfront, the word "collateral" is meaningless in this case as there is no risk.
    The FSCS is taking the risk.

    The point about no collateral being required is that, if a bank is short of collateral but needs to borrow some money, then they *would* offer savings accounts at above 0.5%. But nobody can force them to do this if they don't need to. Which is why I was asking who exactly is going to "save" savers, since the govt and BoE cannot do it.
    "A life, Jimmy, you know what that is? It’s the s*** that happens while you’re waiting for moments that never come." -- Lester Freamon

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