Monday, April 5, 2010

Savers lose £26bn supporting debt-based monetary system

Emergency interest rate cuts 'cost savers £18bn'

Savers lost out on £18bn of returns last year due to the Bank of England's emergency interest rate cuts, analysis by the Office for National Statistics reveals. Borrowers, however, benefited from a £26bn windfall, thanks to rock-bottom base rates of 0.5%.

Posted by quiet guy @ 01:07 PM (1782 views)
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13 thoughts on “Savers lose £26bn supporting debt-based monetary system

  • Oops. Title should read “Savers lose £18bn …” but hey, what does a few billion matter these days?

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  • Nick Vivian says:

    The transfer of wealth from savers to borrowers has been far far greater than that. Savers have been royally robbed by something called “Quantitative Easing”. It’s STEALING.
    Check out my blog for a full explanation: http://excelexperts.com/Excel-For-Finance-Tips-What-is-Quantitative-Easing

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  • Scandalous. The culture in this country is @rse-about-face. It rewards the indebted with an indefinite “stay of execution”, and punishes savers brutally.

    The Grauniad isn’t allowing comments on the story … I wonder why?

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  • How do savers lose £18bn while borrowers gain £26bn? Shouldn’t the two figures match?

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  • it_is_going_with_a_bang says:

    Not quite sure how they managed to add it all up. Sounds like guesswork to me.

    Statistics should be based on fact and not guesswork.

    However I guess you could half believe it based on fixed rates and trackers on mortgages.
    However as they come to an end the banks can really start printing money with the lack of competition and margins they could only dream of 4 years ago. At the same time savers will still be stitched up.

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  • @drewster:

    Presumably the banks lowered savers’ rates more than borrowers’ rates. Therefore the difference went into the banks’ reserves.

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  • Drewster,

    I’ve had a quick look around the ONS website to try and answer your question but I couldn’t find a directly sourced answer that way.

    The last paragraph of http://www.u.tv/News/GDP-up-%E2%80%93-thanks-to-public-spending-and-car-scrappage/08ccc41c-91b3-454f-89fb-c964de3b6044 reads

    “There was also evidence of the considerable impact of the Bank of England’s unprecedented rate cuts in helping consumers to offset the fall in their incomes. In total, interest payments by households fell by £26bn over the year; though that was partly offset by an £18bn decline in the interest received by savers on their deposits.”

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  • @it_is_going_with_a_bang

    “Not quite sure how they managed to add it all up. Sounds like guesswork to me.”

    That’s a bit unfair. Their publications seem to be packed with data tables. I suspect that they’re doing their best with a difficult and complex subject. Here’s a sample:

    http://www.statistics.gov.uk/pdfdir/qna0310.pdf

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  • Nearly three years on and the emergency measures of rock bottom interest rates and money printing are still in effect. That’s what the real story should be.

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  • mark wadsworth says:

    The MW fag packet says that £20 billion either way looks ‘about right’, as total mortgages and total household savings in the Uk are somewhat more than £1,000 billion, so an average 2% rate cut on mortgages or savings must be in the order of £20 billion (although the true figure may be £30 billion or something).

    To put that in perspective, the interest saving to mortgage borrowers (half of all homeowners) is roughly equal to the Council Tax paid by all households. So borrowers are actually paying negative Council Tax and savers are paying double Council Tax.

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  • “Yah, sold 2007, just sitting pretty, 6.5% interest, didn’t we do well dear!”

    “Err, not quite so my dear!”

    “The bank’s paying a pittance and the old pound is not what it was.”

    “Could we purchase now what we sold back then, for the same money?”

    “Not in our wildest dreams dear, the lucky people who bought it are living

    practically payment free, thanks to our savings!”

    “We should have listened to your mother my dear!”

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  • Naughty doggy!

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  • It_is_going_with_a_bang says:

    The only thing that’s huge coming from low rates for such a sustained time is the dependence on low rates.

    Whatever happened to prudence, savings and pensions…..

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