Savers 'desperately worried' by low interest rates

Quantitative easing (QE) and interest rates at an all-time low, many older people and savers are now desperately worried, according to campaigners.

Recent figures have demonstrated that more money is being put away by savers, as they are now 'desperately worried' rather than because of a choice of accounts giving them real returns for their money, according to the Save Our Savers campaign group.

Average rates of saving have halved recently, and pensioners have been faced with a decline in annuity rates since interest rates were slashed to 'emergency' levels over three years ago.

ING Direct figures which were released this week demonstrated that the typical balance in a savings account had increased to £1,858, which is the highest figure in almost 24 months, even though incomes have been squeezed because of high inflation.

Simon Rose, spokesman of Save Our Savers, said: 'If inflation eats at your savings, that is gone forever. A lot of savers are pensioners who are living off a fixed income and trying to eke out an existence. Savings are going up, but for the wrong reasons.

'People are saving because they are desperately worried. If you feel poor, you are not going to go out and spend.'

He added that the desire of savers to lock their money away was having a wider impact on the economy as people were less likely to make bigger purchases.

Of the Bank of England's policies, Mr Rose said: 'It is as if they have put sand into the engine of the economy and they are surprised it is not going any more.'

Copyright Press Association 2012