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Friday, August 24, 2012

Even in recession the rich get richer: Savers have been hit for £70bn as printing money 'helps rich' admits Bank of England

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 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. Read More