Half of UK consumers say they are being discouraged from saving by the Government, as four consecutive base rate reductions have brought it down to just 2.5 per cent, seeing savings rates plummet.
Cutting interest rates
, intended to try and stave off a depending recession, might be good for mortgage
customers, but, according to new research from Nationwide Building Society, savers feel like they are not being given sufficient encouragement or incentive from the Government to put money aside for a rainy day.
The average rate that savers are getting is now just 1.45 per cent, according to market analysis by MoneyExpert.com, which is especially damaging for people on fixed incomes, such as pensioners, who rely on returns from investments
to top up their incomes due to low pension
Nationwide's study found that almost half of British consumers believe that current Government policy is discouraging them from saving, which is seven per cent more people than in the four months to November last year. Just 16 per cent of consumers think that the Government is encouraging people to save.
And this lack of faith is reflected in the amount that people are paying into savings accounts
at the moment.
In December, nearly a quarter of Brits saved nothing at all, while less than half (47 per cent) saved regularly. Only about a quarter of people think that they are saving a sufficient amount, while more than twice as many (59 per cent) admit that they should be saving more.
"When mortgage rates
fall, savings rates have to follow and this has clearly put a strain on savers' returns." explains Matthew Carter, director for savings at Nationwide
. "Although lower mortgage rates for borrowers may mean that some people have more money to put away, those thinking about beefing up their savings, or even opening their first savings account, may have been put off by the lower rates."
"Of course, we shouldn't be completely surprised by some of these results, as financial pressures take their toll.
"As we enter 2009, we would like to encourage people to save what they can and to choose a savings account that meets their needs whether it's instant access savings accounts
or notice a long-term bond
or tax-free savings
© Fair Investment