David Prosser: Another black day for anyone with savings

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Outlook Back in the good old days, before the credit crunch and the recession, the occasional announcement of an interest rate cut would prompt mortgage borrowers to turn to their calculators with glee as they worked out by how much their repayments would come down. Meanwhile, Britain's savers – who comfortably outnumber the borrowers – looked on ruefully.

What those savers never imagined, however, was that there would come a time when almost all of them were losing money on their accounts. Yet that is the situation we now find ourselves in with the Bank of England base rate at 0.5 per cent and inflation, on yesterday's figures, at 1.9 per cent.

Assuming you are a basic-rate taxpayer, your money now needs to be in an account paying 2.375 per cent a year before tax in order for the real value of your savings not to be falling. Just one in 10 accounts clear that bar. If you're a higher-rate taxpayer, the rate you need is 3.75 per cent – only one in 100 accounts is good enough to qualify.

Nor is there a compelling reason to expect this situation to improve any time soon. Though there is likely to be a spike in inflation in January when VAT goes back up to 17.5 per cent, this will be a one-off statistical oddity. For most of 2010, the downside risk is pitched towards growth rather than inflation, and interest rates will stay low.

Savers might once have hoped for political intervention in such a situation. After all, encouraging long-term saving is a key public policy for any government that wants to keep welfare spending down.

Sadly, in the current environment, government is more interested in persuading the banks to lend at affordable rates – savers, as usual, are on their own.