4th March 2016
Tomorrow marks the seventh year of record low interest rates of 0.5%, which has left savers £160 billion out of pocket.
On 5 March 2009, the Bank of England made the decision to slash interest rates to the lowest level since the central bank was founded in 1694 as a way to kick-start the UK economy following the financial crisis.
While homeowners have seen their mortgage payments drop, those with savers have been far less fortunate as banks cutting savings rates to virtually nothing.
In fact, savers are estimated to have lost out to the tune £160 billion since 2008.
Kevin Caley, chairman of ThinCats, said it was ‘scandalous that savers and private investors have been stuck with miserable interest rates for seven years’ and that they ‘wouldn’t be toasting this anniversary’.
‘These people have effectively paid for the banking crisis, with recent estimates suggesting they’re £160 billion out of pocket since 2008,’ he said.
Paul Whitlock, director of savings at Charter Savings Bank, said while 2009 may seem like a distant memory, savers were still feeling the impact.
‘As the Bank of England raises a glass to its seventh anniversary with 0.5% interest rates, you could forgive savers for not joining in with festivities,’ he said.
‘Low base rate and quantitative easing has depressed high street returns, and the landmark coincides with (Bank governor) Mark Carney hinting at even more measures to boost the choppy economy, so savers are unlikely to see high street banks up their rates any time soon.’
Caley agreed that there would be little respite for savers any time soon as the economy fails to continue its recovery.
‘It’s unlikely that rates will improve for several more years – at least until the economy has fully recovered to its pre-crisis level, markets are less volatile and political uncertainties in Europe and the USA have been resolved,’ he said.
‘Indeed with the property market showing signs of overheating, bricks and mortar could be the next major correction to hit investors. Some are beginning to recognise this along with the weakness of markets, which is why we’ve seen an explosion in alternative finance sectors, such as peer-to-peer, which last year grew to £3.2 billion.’