Yesterday in the Commons during the debate on the deficit reduction I warned the government again about rising interest rates. I tried to explain to them that if they persist with huge borrowings and so much overspending, it will drive interest rates higher, damaging the recovery in the private sector. I explained that the markets could do this on their own, whether the Bank of England left interest rates on hold or not.
This morning I awoke to read that Skipton Building Society, one of Labour’s own preferred mutuals and a specialist institution taking deposits and lending for house purchase, has hiked its interest rates. It feels it cannot compete for deposits from savers unless it does so.
The Minister of course was unable to refute, comment on or accept my remarks. It is such a pity they neither listen nor understand what is happening to the economy, preferring their ludicrous soundbites to the realities of the markets that are now beginning to bite them.
Skipton have hiked their standard rate from 3.5% to 4.95% – a big rise of 1.45% or over 40%. It’s 5.2% if you do not pay by direct debit. That’s a mighty long way from the 0.5% the government boasts about in the Commons.
I must say I enjoyed reading the Skipton’s account of what it is doing. Their site begins with an all too true remark “At Skipton BS we know every penny matters”. No doubt that’s why they need more of them.