Recession Watch : Savings rates
One of the worst hit sectors of the UK over the last few months has been the saving sector. Many people have literally been forced to spend their nest eggs as opposed to living off their interest as they had done in the past. A large number of banks have reduced their savings rates to near 0% and those offering anything like a competitive rate want you to lock your money in for a substantial period of time. However, as UK base rates appear to have "bottomed out" there are signs that UK savings rates may well start to rise in the short to medium term.
It will be interesting to see how the UK banking sector responds to the indication by the Bank of England that base rates have "bottomed out". There have been tentative signs of an increase in savings rates over the last few days as the outlook for the UK economy looks set to turn for the better. However, those expecting a sharp jump in UK savings rates may be disappointed as pressure on mortgage rates in particular will curtail any significant jump in UK savings rates.
However, in the medium to longer term, assuming that the UK economy continues to show signs of recovery, we should see a significant increase in savings rates. This will take away much of the financial pressure large groups of the UK population have been feeling over the last few months.
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