UK Savings Rates offer poor returns

UK P2P finance website RateSetter.com has today pointed to startling new data published by Moneyfacts as evidence that the nation is sleep-walking into “a savings bust” and has warned that without Government action, much of the population will continue to suffer negative returns. Their statement comes as consumer champions ‘Save Our Savers’ endorses peer-to-peer finance as a key solution to savers’ problems.

According to statistics compiled by Moneyfacts, only 227 out of a total of 1,092 of standard savings accounts currently available on the market offer rates which deliver a positive return when basic-rate tax and inflation are taken into account. The campaign group Save our Savers has found that as a result, Britons are saving a lower proportion of their incomes than nearly every other European country.

Save Our Savers’ Jason Riddle said: “Britain’s Savers are paying the price for the financial crisis and the curse of low interest rates looks set to continue. P2P lending provides a credible alternative for savers looking to improve their returns and beat inflation – it’s a bottom-up movement that seems to be catching on.”

RateSetter.com Director Alex Gowar said: “Financial innovation is delivering, but because consumers are wary of new products, most savers are still accepting negative returns. The Government, which is the biggest beneficiary of negative real rates, could give something back to beleaguered savers by lessening the tax burden on savings, and it could also encourage alternative forms of saving. Our message that every saver has had every penny returned – and that’s many more pennies that they would get from the bank – will only be heard loudly enough with their support. In the meantime, the country is falling into savings bust.”