Leading article: Do not forget the plight of savers

Share
Related Topics

As the tediously moralising Polonius had it in Hamlet,"neither a borrower or a lender be". It is a course that the Government and financial authorities seem determined to promote in the first case and thwart in the second.

Yesterday's one percentage point reduction in interest rates has a single purpose in mind: to ease the cost of borrowing and thus stem, or at least moderate, the slide into recession. It shows, if further demonstration were needed, the perilousness of our present economic situation. The Bank of England, seeing the threat of recession turning into a full-blown depression, has decided to sweep away its concerns about inflation and move as hard and as fast as possible to reflate the economy through interest rate reductions. If the recession continues to gather pace, rates could go down to an astonishing zero per cent, on some predictions.

That is good for borrowers, particularly those with mortgages or business loans tied to the Bank base rate (provided, of course that the banks, struggling with their own balance sheets, pass on the reductions in full). This, together with the action taken by the Government to reduce taxes, increase support for the poor and pressure the banks to go easy on businesses needing cash and house-owners needing help, should at least ease some of the pain, even if it cannot cure the illness.

The problem comes with the other side of the equation: the lender. So far savers and the shareholders have been ignored in this drive to reflate. Yet, over the longer haul, lenders are going to be needed to get the economy growing again. They will be called upon to provide the long-term investments needed by industry. The lower the savings rates, the less inclined people will be to put money aside for the future.

Also, the lower the rates, the worse the situation for those nearing retirement. They are being hit by the double whammy of collapsing share prices and reduced annuity rates.

One of the causes of our present woes is excessive borrowing. For the greater good, it may be necessary to encourage us to keep borrowing in the short term. But for the future, the authorities need to cast a protective eye over the saver and investor too.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Operations Manager

£24000 - £25000 per annum: Recruitment Genius: Situated in the heart of Bradfo...

Recruitment Genius: Senior IT Support / Projects Engineer

£26000 - £29000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Bench Joiner & Wood Machinist

£20000 - £35000 per annum: Recruitment Genius: This busy local Joinery company...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

Day In a Page

Read Next
 

If I were Prime Mininster: I would legislate for abortion on demand and abolish VAT on sanitary products

Caroline Criado-Perez
 

Election catch-up: Just what the election needs – another superficially popular but foolish policy

John Rentoul
Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence