Bank rates hit 1%
Don't save it, spend it!
This is not a good day to buy a winning lottery ticket
Click image to enlarge
With interest rates now at the lowest recorded levels in British history it is not a good time to be worrying about your savings, in fact it’s hardly worth the bother saving at all, you may as well go out and spend the lot. Well that’s what Broon and Darling want you to do, isn’t it, to stimulate the economy?
With a combination of Labour’s disastrous spend, spend, tax, tax, borrow on the never never economic policies, poor bank regulation, the massive demands for cash placed on the markets by government’s pseudo nationalisations and it’s own future borrowing plans, we have now reached the end of the road for thrift and prudence. Savings and pensions will now be further devalued as banks try to beef up their balance sheets before the end of the fiscal year.
This is not a good time to be buying the winning lottery ticket!
Anybody heard from the Chancellor lately? (Don’t tell me, he’s stuck in the BBC’s blizzard of snow coverage.)
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Today’s cut was as predictable as it was unnecessary. Savers are punished, the banks that caused the problem in the first place are rewarded.
Michael
February 5, 2009 at 7:46 pm
I’m not sure about your argument here, Michael. GDP has severely contracted while unemployment has jumped since the MPC’s last meeting. More importantly is the banking credit conditions survey which has shown that even more lenders plan upon tightening credit availability over the next two quarters of ’09. Like it or not, any economy needs institutional creditors.
In short, don’t blame the BoE for taking monetary policy decisions, but rather this Labour government for its lack of a credible fiscal stimulus package and years of gross irresponsibility.
David Potts
February 6, 2009 at 12:22 am
Did we leave enough time to see if the previous cut had worked?
Is the problem the price or the availabilty of credit? Cutting rates is a pretty crude way of ‘ensuring’ extra credit. Won’t lenders just increase their margins? Sorry if I don’t believe banks have a sense of responsibilty.
The BoE panicking is even less helpful than their complaceny over the past few years.
Strange, I didn’t hear the Tories complaining about the government’s financial irresponsibility when the economy was booming. Rather, you lot were claiming the credit for it!!
Michael
February 6, 2009 at 8:52 am
Okay admittedly I did slightly politicise that, but the main point I was making was an economic one (and more of a macro one than simply focusing directly upon retails savings and loans). When interest rates are cut, Libor (the rate at which banks lend to one another) also falls, thus ensuring more liquidity within the banking system and a greater confidence to ensure the flow.
The knock on effects of this are many and varied but essentially consumers and businesses benefit because financial institutions will be less likely to be aggressive in dealing with credit defaults and foreclosures.
Governor King and the MPC have followed the concensus of almost every UK business leader in taking these steps.
Finally, Chancellor Clarke left the UK with a rock solid economy, the envy of Europe. Gordon Brown squandered it.
David Potts
February 6, 2009 at 10:43 am
Not the Federation of Small Businesses, who warned against cutting rates. With the exception of one member, King and the MPC failed utterly to see what was transparently obvious twelve months ago. Why should we have any confidence in them, or the CBI business ‘leaders’, now?
I guess we’ll just have to agree to differ.
Michael
February 6, 2009 at 9:34 pm
So what’s your big solution, Michael?
David Potts
February 7, 2009 at 1:15 am
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Jesse Huppert
August 29, 2010 at 11:42 am