Since the interest rates were cut in mid 2008, borrowers in the UK have lost approximately £49bn, according to latest figures released by BoE. On the bright side, borrowers have benefited by these reduced rates.
The Bank of England recently released figures that show savers in the UK have lost out on at least £43 pounds because the interest rate was reduced to 0.5% in 2008. For more than two and a half years this adds up to a significant loss for those who count on those interest rates as a nest egg.
Although these rates are low and savers are not able to increase their savings substantially, the other side of this issue is that fewer people have money to save. Since inflation is at record highs and greater numbers of people have become redundant, fewer people are adding to their savings whilst greater numbers are dipping in to make ends meet.
Nonetheless, consumer advocates are campaigning for higher rates. One such advocate is Simon Rose from the campaign group Save our Savers. It is his mission to win better rates for savers as he feels the BoE could be doing more to counter inflation with higher savings rates.
On the bright side, these low rates are benefiting borrowers as they have benefited by a figure greater than £51 over the same time period. Reduced rates make interest on loans lower which in turn makes loans more accessible to a greater number of people.
In the end, even these low rates are not enough incentive as statistics also show that fewer people are borrowing money. Inflation has hurt everyone across the board from savers to borrowers in this respect.
For this reason, Rose is hoping that Chancellor Osborne will hear the plea of the advocate group which asks that income tax on savings interest be suspended during these harsh economic times.
