On 3rd August 2016, the Bank of England cut official interest rates to 0.25% - the lowest in its 322 year history.
The Bank hopes that this will give a much needed boost to Britain’s post-Brexit economy. But with historically low interest rates continuing to fall and many bank accounts offering little in the way of returns, it appears that savers are now facing a crisis.
1000 adults were surveyed by OnePoll for the Tonight programme to examine the state of Britain’s savings - revealing some worrying statistics about the UK’s financial security.
80% of adults are worried about their money in today’s financial climate
40% of those surveyed worry more about money than sex and relationships
32% have less than £500 in savings to cover unexpected costs
69% do not feel totally in control of their finances
37% of adults cannot calculate the impact of a 2% rise in interest rates on their savings
In Saving Britain's Savers - at 7.30pm on ITV - reporter Adam Shaw explores the impact of the rate cuts and finding out what other options might be available for people trying to be smart with their money.
In response to the cut in the base rate, many banks have lowered their interest rates with some accounts falling below the rate of inflation so, instead of making money, the real value of our savings could actually be falling.
Since August 2012 we’ve seen over five thousand cuts to existing savings accounts, it has been bad already but now we’re seeing rates being cut further, they are being cut to the bone in some instances. Savers are having a really tough time.”
Faced with economic uncertainty, historically low interest rates, rising inflation and property prices, many households are struggling to save at all and do not have assets such as property or pensions to fall back on. Those fortunate enough to have put money away are faced with a confusing array of financial products and tough decisions on how to adequately protect their future.
So, with bank accounts, property, stocks, shares and pensions, there are many options available for our savings but it’s hard to know which of those is a good bet and which are too much of a gamble.
Adam Shaw meets 63-year-old Jim from Bolton who is worried about the returns on his pension pots. He is looking for an alternative to putting his lump sum in the bank and would like to explore investing in stocks and shares.
We also visit a classic car showroom with Geoff, a surgeon from Cheshire, who has money in various accounts that he’d like to see a better return on.
Finally, we hear from 27-year-old Georgie who would like to invest in property but, like more than half of first time buyers in the UK, she is struggling to save for a deposit and needs a helping hand from her family.
With the property market flourishing and the base rate remaining at an historic low, the UK could be described as a borrower’s market but, is the emphasis on spending and borrowing contributing towards a looming savings crisis in the UK?
If you are discouraging people from bothering to save then you are setting up a system whereby people won’t have any means of supporting themselves if something suddenly goes wrong....People have lost the understanding of the value of saving, especially younger generations.”