Savers take shelter during economic storm

07 October 2008 / by Rebecca Sargent
• finds that savers are turning to 'safer' savings providers as the UK banking system offers little reassurance

Nervous British savers are turning to safer saving avenues as the UK Government keeps its plans under wraps, traffic has shown.

As speculation mounted last weekend over the UK deposit guarantee scheme, Irish banks have been experiencing a surge in popularity following Ireland's unlimited deposit guarantee announcement.

And, during last weekend, traffic through reflected this trend. The Post Office's savings products are provided by the Bank of Ireland and, as a result, savers have been rushing to move their cash to the safety of an unlimited guarantee.

In fact, interest in the Post Office savings accounts through has more than doubled over the past two weeks, and the Post Office savings accounts accounted for 17% of savings traffic through last weekend.

A similar surge in nationalised bank Northern Rock's savings products has already forced the bank to withdraw the majority of its savings accounts for fears it would have an unfair advantage over other savings account providers.

However, the savings that saw the most interest through last weekend were Tesco savings accounts, which saw 322% more interest than Halifax savings accounts, which have been at the centre of controversy as Lloyds TSB prepares to bail its parent HBOS out and form a 'super bank'. Tesco took an 18% market share of traffic, compared to 4% for the Halifax savings accounts last weekend.

Commenting,'s chartered financial planner, Sharon Bratley said: "It is not surprising that we are experiencing higher volumes of traffic in these areas. Tesco has recently announced a 10% increase in first half profits, making it an attractive option for savers who see a supermarket as being a safer place than a bank for their savings, particularly as banks continue to announce losses of millions as a result of economic turmoil.

"Furthermore, following the Irish Government's deposit guarantee announcement, all Irish owned savings products will be experiencing a surge in interest, so it is no surprise that we have seen so much interest in the Post Office savings accounts."

Mrs Bratley added, "Security is clearly uppermost on savers’ minds at the moment as banks merge and Brits are left in the dark about the future of the UK deposit guarantee. In fact, the Post Office savings rate is lower than some on offer such as Alliance & Leicester interest rates, but this does not seem to be bothering savers as they continue to move their money into 'safer' accounts."

*Data collected by between Friday October 3 and Sunday October 5