Experts have revealed that they fear a lack of UK economic growth in 2011 could have a negative impact on savings accounts for Britons in the next few months.
With inflation running at 4.4% for February, the Bank of England announced again this week that they would leave interest rates at 0.5%, for the 25th month in a row, as they ‘wait and see’ before acting.
Pure FX expert James Roberts revealed, “The chancellor revised [gross domestic product] down to 1.7 per cent. I tend to agree with him. I really don’t think growth is going to be particularly good this year. I wouldn’t challenge [the chancellor's] figures.”
With the Bank of England afraid to increase the base rate as it could push the country back into a recession, low interest rates for savers look set to stay.
There was a glimmer of hope as Bank of England figures showed that mortgage approvals had increased to 46,967 in February, which was up 1.2% compared with the last six months.
Natasha Ter Braak from children’s savings website, MyEggNest.com revealed, “Savings can be boosted in two ways. One is the economy performing well, which in turn means investments have stronger returns and savers get better returns on their savings. The second being a higher interest rate on savings, which will only happen if the base rate increases.
“With this unlikely to happen until the Bank of England see a substantial improvement in the state of the economy, it’s unlikely savings conditions will improve in the next few months.”