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: Web Developer - PHP

£17000 - £24000 per annum: Recruitment Genius: An exciting opportunity is now ...

Recruitment Genius: Account Executive - Graduate / Entry Level

£22000 - £27500 per annum: Recruitment Genius: This digital advertising infras...

Recruitment Genius: European Sales Director - Aerospace Cable & Wire

£100000 - £125000 per annum: Recruitment Genius: As a top tier supplier to the...

Recruitment Genius: Digital Project Manager

£17100 - £22900 per annum: Recruitment Genius: One of the North West's leading...

Day In a Page

Read Next
 

Caitlyn Jenner's first shoot is a victory - but is this really best version of femininity we can aspire to?

Sirena Bergman
The sun balances next to St Albans Church in Earsdon, North Tyneside.  

The world’s nations have one last chance to slow climate change

Michael McCarthy
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral