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National Savings and Investments suffers £1 billion outflow

The news that the National Savings and Investments company (NS&I) has suffered a £1 billion outflow of funds between April and June has caused significant controversy in the UK financial markets. For the first time in some months the NS&I refused to match the best deals on the market regarding savings rates thus effectively forcing many savers into the arms of rival financial institutions.

When chief executive Jane Platt suggested that "We allow banks to rebuild their balance sheets by not being at the top of the league tables" there was a massive backlash against apparent government intervention. Even though the NS&I has refused to confirm accusations that the government was in some way involved in the reduction in competitiveness over the last quarter there were discussions with the Treasury regarding the UK banking sector as a whole.

This seems to fly in the face of the UK government's strategy of allowing the likes of Northern Rock and Royal Bank of Scotland, both majority owned by the UK taxpayer, to operate at arm's length and free of any government intervention. The fact that this announcement comes on the day that Parliament enters its first of 82 days holiday seems to be a little suspicious in itself.

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