By HUGO DUNCAN | Record low interest rates have robbed savers of more than £70billion while printing money to revive the economy has mainly benefited the rich, the Bank of England admitted yesterday. Interest rates have been pegged at 0.5 per cent since March 2009 – the lowest level in the Bank’s 318-year history – in an attempt to prop up the economy. Borrowers have benefited to the tune of £100billion thanks to lower mortgage payments, with those on floating rates the main beneficiaries. The Bank of England has admitted that low interest rates have robbed savers of £70billion The Bank has also unleashed a £375billion money-creation programme through so-called quantitative easing (QE) as it struggles to kick-start a recovery. But critics have long claimed that ultra-low interest rates have hammered Britain’s army of savers and the decision to print money has led to a ‘death spiral’ in pensions by slashing annuity rates. Savers have lost out heavily since rates were cut from 5 per cent in September 2008, with some claiming the loss is nearer £100billion when inflation is taken into account. The Bank yesterday admitted that savers were among the biggest losers from its policies and the richest families the biggest winners – with QE boosting household wealth ‘by just over £600billion’ as the value of shares and other assets recovered in the wake of the financial crisis. Governor Sir Mervyn King insists that people in the United Kingdom would have been worse off had the Bank not acted That is an average of £10,000 for every man, woman and child in the country although the 22-page report into the impact of QE said the most well-off will have benefited the most because they hold the most assets. Independent analysis suggested that each of the richest 2.5million households in the country has enjoyed a windfall of anywhere between £100,000 and £300,000 since QE was launched in March 2009. Campaign group Save Our Savers said there has been ‘a massive transfer of wealth from the poor to the very wealthy and from savers to borrowers’, due to the Bank’s policies. The Bank, led by governor Sir Mervyn King, said: ‘Without the Bank’s asset purchases, most people in the United Kingdom would have been worse off. ‘Economic growth would have been lower. Unemployment would have been higher. Many more companies would have gone out of business. This would have had a significant detrimental impact on savers and pensioners along with every other group in our society.’ But Nigel Green, of deVere Group, the world’s largest firm of independent financial advisers, said he was ‘baffled’ by the report. He added: ‘The Bank’s findings are in sharp contrast to the reality of the situation for many of the 20million-plus people who are on the cusp of retirement or who are already retired. ‘There can be no doubt that QE has made millions of pensioners permanently poorer.’ Simon Rose, of Save Our Savers, said: ‘This report is a whitewash, making the Bank of England seem cleaner than clean.’Even in recession the rich get richer:
Savers have been hit for £70bn as printing money 'helps rich'
admits Bank of England
Friday, 24 August 2012
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