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Is the UK savings market is showing signs of life?

The last few days have seen a number of potentially interesting savings schemes released into the UK market with a 4.75% fixed-rate three-year scheme from Close Brothers, a 3.15% instant access scheme from Birmingham Midshires with a number of 4% plus interest rate opportunities rumoured to be on the way. So is the UK savings market starting to turn?

In order to get a feel for the UK savings market we need to look at the potential movement of UK base rates in the short to medium term. While many analysts expect rates to remain at 0.5% for the moment, it seems inevitable that rates will increase substantially over the next 12 months. This is based upon the fact that inflation has not fallen as far as expected, the UK economy is expected to turn the corner and more and more investors and consumers will have money in their pockets.

The very fact that Close Brothers is offering a three-year fixed scheme at 4.75% would indicate that they believe UK base rates, or at least UK savings rates, will rise further than the 4.75% rate over the next three years. While this looks like a very brave call at this moment in time it is worth remembering that UK base rates swiftly fell from 5% to the current 0.5%. Everything hinges upon a recovery in the UK economy which will then prompt inflation to firm up and base rates to follow suit. There is no doubt that the situation is much better for UK savers at this moment in time but will others in the UK savings market follow suit?

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