Interst Rates Down again by 1%

Lynt_3

I opened this account the other day
http://www.lloydstsb.com/rates_and_charges/savings/easy_saver.asp

So by the time the rate goes down another 1% plus 0.5% below that, they will be paying a whopping 1% interest for first 12 months. Oh Joy!

Hmmmm, I don't think I'll bother adding another penny.
I only opened it because I have a current account with them, and just wanted somewhere to dump any surpus money, that I might not use each month. Might just as well spend it instead.
I could do with a new TV.

Primrose

We will never get 0.3% inflation. Every year 20% of our Council Tax bills is spent on funding pensions for those working in local authorities, the police, and civil servants who have index linked pensions which are not funded in the same way that occupational final salary schemes are funded, but by taxpayers. Since the number of employees in the public sector is rising every year, the taxpayers' collective bill will never fall.

Old_Slaphead

Primrose wrote: »

We will never get 0.3% inflation. Every year 20% of our Council Tax bills is spent on funding pensions for those working in local authorities, the police, and civil servants who have index linked pensions which are not funded in the same way that occupational final salary schemes are funded, but by taxpayers. Since the number of employees in the public sector is rising every year, the taxpayers' collective bill will never fall.

That can't be true. Brendon Barber said that giving public sector workers bigger pay rises doesn't fuel inflation - presumably the same applies to funding (grossly extravagent, unaffordable, unfair and devisive in current economic climate) public sector pensions.

ps it's 25% not 20% that goes on pensions (30+% in case of police)

tuggy12

Yes, good old Brendon Barber, another one who's never had a proper productive job.
He's just trying to keep his nose clean now, to make sure he doesn't jeopardise his place the House of Lords, like his predecessors.

gozomark

Primrose wrote: »

We will never get 0.3% inflation. Every year 20% of our Council Tax bills is spent on funding pensions for those working in local authorities, the police, and civil servants who have index linked pensions which are not funded in the same way that occupational final salary schemes are funded, but by taxpayers. Since the number of employees in the public sector is rising every year, the taxpayers' collective bill will never fall.

by this time next year RPI will be negative

tuggy12

talana wrote: »

Sure, not all will be appropriate to everyone but don't tell me these people can't do something.

Maybe "these people" could get jobs at Woolworths or MFI.

I've heard jobs are going there.:think:

savetilibleed

blondieleopard wrote: »

now if WE ALL withdraw our savings......and stick at home...then the govt would seriously have to address savers concerns...govt cannot keep pumping
tax payers money into banks to increase fluidity....
how many billions would be xtracted from market if we all withdrew our monies....BILLIONS.....

The government would have problems from that lost revenue from tax paid on savings. The Northern Rock situation would be a small scale example of what might happen.

MiserlyMartin

derbyjon wrote: »

A few months ago we were all getting around 7% interest compared with 5.8% inflation.

If in a year's time we're getting 1.5% interest compared with 0.3% inflation then isn't our money just as well off as before?

In September, RPI was 5.0%, CPI was 5.2%. In October it was 4.2% & 4.5%.

The Bank of England are forgetting their remit - to keep inflation at 2%. It has been way above this for well over a year. Cutting rates like this will not help. It seems to me that the prudent savers are screwed to bail out the reckless. The idea now seems to be to set rates to try to prop up the housing market, not to control inflation. Will RPI really fall even negative next year as the BoE say, or are we heading for hyper inflation? We could well be.

Ok there were 7% fixed deals a few weeks ago. But how many people actually got one? That does not help anyone, when the majority took a one year fix and will run out by the time we may have 0% rates. Somebody pinch me it seems like a daydream. I can't believe we have such crazy low rates.

Well one things for sure, I am determined to not to spend it, as the government want us to do, they can go jump. I never voted for these idiots anyway. I might move it out of the country. It seems like a good idea as the pound is toast due to their policy. Todays cut will probably cause the pound to tank even more.

Milarky

There was an interesting comment of Radio 4's PM today; banks must depend on savers because wholesale markets are dead. We knew that. But the commentator suggested (when asked about mortgages at 2.5% and deposits @ 5%) banks would consciously wear this obvious loss-making situation for some time as they were trying to keep depositors loyal.

And it does actually make sense. Banks could obviously hold deposits on which they 'lose' 2.5% pa for quite some time before they have react. Shareholders cannot do anything to the banks for having operating losses as a result since dividends are on-hold under the government's preference share scheme.* If banks are having to write down substantial chunks of mortgage-debt in the current climate, does running a 'deficit' on deposits really hurt their prospects that much? Their working assumptions must be that once conditions start to improve they can raise prices again, and can move into profitability. What would happen re. savings rates which have proved to be 'sticky downwards' is that they will then become 'sticky up' I imagine.

*Nationwide BS ins't taking the cash - hence their scorched earth policy towards their saving members. It will be interesting to see what becomes of this atitutude a year down the line...

GooeyBlob

blondieleopard wrote: »

the govt should be offering savers......govt bonds..

The government does offer bonds, they are known as gilts. It's how they borrow money - investors give the government money in return for firm promise of repayment. They're IOUs signed by the government, if you like. However, I wouldn't touch them with a barge pole at the moment, and this is why:

Essentially, the government ran up a debt when it should have been putting money aside for a rainy day. When the economic cycle turned, as it now has, it should have had a large surplus to deal with the downturn. In fact, it was already well in the red and now has to take out absolutely astonishing amounts of extra debt in order to balance the books. That debt is at a level which worries many investors, and there are now real concerns about whether or not the government will be able to persuade investors to give them any more money - we could be heading towards what is known as a "gilts strike", where the government is unable to raise money this way.

The one consolation for savers is that rates would end up rising dramatically should this happen. We shall have to wait and see though.