Seventh time lucky for savers

Andrew Hagger of Moneynet.co.uk comments on the base rate decision announced today: The MPC decision to leave rates on hold will be welcomed by millions of battered savers, although it is a miniscule crumb of comfort when you look at savings rates on offer today compared with last October.

At the beginning of October 2008, prior to the first of six consecutive base rate cuts, someone with a £50,000 nest egg would have received an annual income of £2584 (net of 20% tax) in a 1 year fixed rate bond paying an average 6.46%. That same person will now be looking at a drastically reduced annual return of just £1112 (net of 20% tax) at an average rate of 2.78%.

This means they will be worse off to the tune of £122.67 per month, no wonder those relying on savings to supplement their income are faced with little option but to dip into their capital just to make ends meet.

Older savers will be hoping that Alistair Darling appreciates the predicament that those on a fixed income are facing and delivers some worthwhile concessions in the forthcoming budget rather than just papering over the cracks with a token gesture.