BoE urges savers to spend spend spend to save the economy!

Dave_save

I shall quite rightly ignore what the B of E tell me to do. They are the very organisation who recently said 'sorry' for contributing to the mess we are in right now. It's very unlikely I'll spend, but I'll keep hunting down the best savings investments I can to ensure I do have a financial cushion in the years to come.

VAT up to 20% in the new year is the policy that will probably end all hope of this country getting on an even keel. I'll spend even less after Xmas, and so will millions of others.

On another note I was just wondering how much revenue is being lost in tax on savings due to the low interest rates right now. Must be quite a sum.

metrobus

If I do decide to spend some of my savings due to the interest rate being lower than the rate of inflation,it will not be in this country thats for sure :beer:.

Last one leaving please turn off the lights.

Paul_Herring

For those loathe to click on a DM article, there's a version in the DT: http://www.telegraph.co.uk/finance/personalfinance/savings/8028884/Savers-told-to-stop-moaning-and-start-spending.html

Older households could afford to suffer because they had benefited from previous property price rises, Charles Bean, the deputy governor, suggested.

They should "not expect" to live off interest, he added, admitting that low returns were part of a strategy.

Right - so I'm not an 'older household,' nor would I consider myself (a) particularly old (person.)

Mr Bean then continues to blather on in a way which suggests that the only people who are suffering as a result of the BoE's now public strategy are those that
1) are old
2) own properties that have increased substantially in value
3) have cash savings

What about those of us who aren't old, don't own properties (either at all or that haven't risen that much) and have cash savings that are currently losing value?

I have an emergency fund that is (going on current index values) devaluing at 4% a year.

Am I expected to spend that emergency fund, just because the BoE tells me to?

On a totally related note,

Charles Bean b. 1953 entered H M Treasury 1975 and sits on £250,000 pa with a Pension Fund in Indexed-Linked Bonds. He has been in the engine -room of British Economic Disaster for 35 years which makes for a very lovely pension.

He has taken NO risks with his career or his income. He has been an Apparatchik through and through and has moved from one part of the Treasury to the Bank of England department of The Treasury.

le_loup

C'mon Paul, you are one of the brighter people here.
No one is telling you what to do with your money, all that is happening is encouragement in a certain direction, which you chose to allow or to ignore. People in all sorts of situations are going to or are already suffering. Why should people with savings be any different; isn't it just special pleading. Our standards of living cannot remain unchanged during this sort of situation. Low interest rates, frozen wages, increased taxes, reduced benefits, reduced pensions, loss of jobs are all part of the mix.
OK, I know we didn't cause it. OK, I know BofE officials are overpaid and over pensioned. They are both completely different issues, each worthy of separate debate (and some). To conflate basic economic direction with greedy bankers is entirely unreasonable and typical of the Daily Mail style ... let alone that bastion of reasonable economics, the Daily Telegraph. (When the owners of that institution start to pay tax in the UK, I may start listening to their righteous indignation on anything.
For now, we are left with the fact that spending drives our economy and low interest rates are a way of getting us to do just that; like it or not, do it or not.

Paul_Herring

le_loup wrote: »

C'mon Paul, you are one of the brighter people here.
No one is telling you what to do with your money, all that is happening is encouragement in a certain direction, which you chose to allow or to ignore.

The 'encouragement':

1) I keep my emergency fund where it is, to depreciate
2) I place my emergency fund in some other vehicle other than a cash savings account - thus no longer making it an emergency fund, leaving me without one.
3) I spend my emergency fund, thus I no longer have an emergency fund.

I see no 'win' situation there.

People in all sorts of situations are going to or are already suffering. Why should people with savings be any different; isn't it just special pleading.

Perhaps, because those with the foresight to actually save shouldn't be penalised, and be expected to drag the economy out of the doldrums because of the actions of the rich, bankers and government?

I'm not saying I'm not spending; I am. Indeed I'm currently using other savings at the moment to supplement my income at the moment - I just fail to see why I should be told to 'start spending, then when you've spent it, come to us for a loan so you can spend some more,' which is effectively what they're saying.

Our standards of living cannot remain unchanged during this sort of situation. Low interest rates,

Low interest rates? Have you tried to get a loan/credit card recently?

frozen wages,

For some, yes. For others a 'in real terms' reduction - much like savings; should they be spending more as well? If Mr Bean's interpretation of what needs to happen is right, then they should. It's idiocy.

increased taxes, reduced benefits, reduced pensions, loss of jobs are all part of the mix.
OK, I know we didn't cause it. OK, I know BofE officials are overpaid and over pensioned. They are both completely different issues,

They are not different when the overpaid and overpensioned are telling the underpaid and underpensioned what to do with their money to solve the former's mess, without a grasp of what's happening in the real word.

each worthy of separate debate (and some). To conflate basic economic direction with greedy bankers is entirely unreasonable and typical of the Daily Mail style

If you're talking about what's being discussed here, no it isn't, and no it isn't.

StevieJ

Paul_Herring wrote: »

?

I have an emergency fund that is (going on current index values) devaluing at 4% a year.

Am I expected to spend that emergency fund, just because the BoE tells me to?

On a totally related note,

My emergency fund is invested in Shell shares, up 20% and 6% dividend, I have some decent cash ISAs but I would rather take a risk than leave in those pathetic bank accounts.

Paul_Herring

StevieJ wrote: »

My emergency fund is invested in [...] shares

That is not what I would consider an emergency fund. An emergency fund is money I can access within hours or at a push days.

Hoping the stock market didn't drop 25% yesterday so I could call on the funds today isn't really my idea of a safe place for such funds.

smile86

Wish I had money in savings to spend! One day maybe...

Old_Slaphead

StevieJ wrote: »

My emergency fund is invested in Shell shares, up 20% and 6% dividend, I have some decent cash ISAs but I would rather take a risk than leave in those pathetic bank accounts.

Better keep your fingers crossed that they don't have a dodgy oilwell somewhere off the coast of America that you know nothing about.

Many people, me included, could claim to have some of their rainy-day money stashed away with BP

margaretclare

I'd rather listen to this man, Peter Hargreaves: http://www.h-l.co.uk/news/expert-comment/the-aptly-named-mr-bean