You might have thought when the government needs to borrow £150 billion National Savings would be after your money. Yet if you go onto their site this morning it tells you they are not currently selling either Index linked or fixed rate 2 or 5 year bonds on their usual tax free basis.
It can’t be they do not want the money. There must be some rethink going on. Apparently Index linked certificates have proved very popular. When bank and other savings deposit rates are so low many have preferred the 1% plus inflation that National Savings was offering, to give them more than 6% a year tax free at the peak of the inflation the monetary authorities have unleashed.
Savers have been getting a rotten deal generally from this era of low official interest rates. Cash on short term deposit has yielded very little, and even medium term savings plans have been on the mean side. Will National Savings come back into the market at lower rates, to give the private sector more chance to compete around a base rate of 0.5%? Or will they come back in with a better offer themselves, recognising that savings rates generally have been too low?
Why didn’t they have the new products ready for the withdrawal of the old ones?
The banks have to think how they are going to respond. They too need deposit money in bigger quantties than they currently enjoy. At a time when it is fashionable to say banks should lend what they can collect by way of deposits, attention shifts to how good they are at attracting them.
Savers are fed up with being mugged. The last couple of years has produced negative returns on many conventional savings products as prices have risen sharply. As always I am not offering investment advice on this site nor recommending particular products.