Savers breathed a sigh of relief when the Bank of England's monetary policy committee (MPC) chose to leave UK interest rates untouched at 0.5 per cent last week.
Six successive interest rate cuts, undertaken to boost the ailing UK economy, have had a horrendous impact on savers. The cuts in rates have cost savers with nest eggs of £50,000 on average £122.67 per month, according to the financial advice website Moneynet.co.uk. The problem of slipping savings is particularly acute for retired people living on a fixed income who rely on returns from deposit accounts for life's little extras.
Despite the MPC's decision not to change the base rate, pressure is growing on the Government to act to compensate savers for the poor returns. "The decision to leave rates on hold will be welcomed by millions of battered savers, although it is a minuscule crumb of comfort when you look at savings rates on offer today compared with last October," said Andrew Hagger from Moneynet.co.uk.
"Older savers will be hoping that the Chancellor, 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," he added.
The Budget statement will take place on 22 April.