Displaying items by tag: savings

The Bank of England is widely expected to cut interest rates, reducing the Bank rate from 4% to 3.75% - its lowest level since February 2023. Analysts anticipate a close vote among the nine-member Monetary Policy Committee, with some members still cautious about easing policy too quickly. If agreed, it would be the sixth rate cut since August last year, reflecting growing confidence that inflationary pressures are easing. New data from the Office for National Statistics show inflation falling more sharply than expected, from 3.6% in October to 3.2% in November. Although inflation remains above the Bank’s 2% target, signs of rising unemployment and a sluggish economy are increasing pressure for action. Economists suggest cooling price pressures now outweigh previous concerns about cutting too soon. Lower interest rates are expected to bring modest relief to homeowners on tracker or variable-rate mortgages, with small monthly reductions in repayments. However, savers are likely to see reduced returns, as easy-access savings rates continue to decline. The decision highlights the delicate balance between easing household pressures and safeguarding long-term economic stability.

The Office for National Statistics (ONS) reports that the proportion of UK residents' disposable income that goes into savings has fallen to a record low. The general secretary of the TUC said, ‘The figures make grim reading. People raiding piggy banks is bad news for working people and the economy.’ With falling wages as living costs rise, many families are running down their savings or relying on credit cards, loans and even foodbanks to get through the month as working households struggle to make ends meet. Vince Cable said, ‘Families are increasingly unable to live within their means or save for the future. Our economy's reliance on consumer spending, propped up by debt, is not sustainable.’ Recently, Moneyfacts said that savers have had a ‘never-ending battle’ to get a decent return on their cash over the past few years, and savings rates are failing to keep pace with the rising cost of living.