Tuesday, 20 July 2010

National Savings Axes Inflation Protected Certificates

The BBC ran a story yesterday National Savings Axed about the withdrawal of Inflation Protected Savings Certificates. These provide a guaranteed rate of interest above the Retail Prices Index, tax free. NS&I also cut the interest rate on some of its other savings products even further below the abysmally low level they already stood at - down to just .25%. The story is interesting for two reasons.

Firstly, the reason the inflation linked certificates were withdrawn was because there had been huge demand for them. That suggests that a lot of people are seeing that a big rise in inflation is coming down the road. In fact, with the RPI at over 5%, these certificates were paying 6% tax free.

Secondly, the spokesperson for NS&I on TV said that the reason they had been withdrawn was that they had already met their target in the first part of the year of how much money they needed to take in, and that if they had kept taking in savings, they would have been raising more money for the Government coffers than was required.

So, what was that crap the Government was saying about they had to slash the deficit because there was no alternative, that no one would be prepared to lend to the Government????

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