Mervyn King downbeat on UK savings rates

Today's report by the Bank of England covered a multitude of different subjects offering advice and forecasts for each and every part of the UK economy. While we have covered many of the headline grabbing statements in some of our earlier articles, there was bad news for UK savers today with confirmation that savings rates continue to fall and are likely to remain at record lows for some time.

The very fact that UK base rates are unlikely to race ahead in the short to medium term takes the heat off the UK savings market and allows financial institutions to pay relatively small savings rates. Despite signs of increasing competition only a few weeks ago, it seems as though savings rates are falling again with this trend is unlikely to change in the short to medium term.

While it is fair to say that the UK economic downturn has touched each and every area of the UK population and business arena many believe that UK savers are the innocent victims of the downturn. Many people have taken years to save a nest egg for their future with the intention of living off their interest in the short to medium term and using their capital at a later date. However, with savings rates at rock bottom the vast majority of savers in the UK have been forced to dip into their nest eggs to survive.