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Penny drops in Whitehall – some people like to ’save’ money


There’s been a noticable change in the noises coming from our politicians over the past few days. Up until recently, they seem to have been largely preoccupied with helping ’struggling homeowners’ (i.e. baling out the simpletons who bought houses they couldn’t afford) and ‘restoring confidence’ (i.e. convincing people it’s safe to keep digging themselves into debt to by crap they don’t need, because it’ll probably all turn out ok in the end).

But now there seems to be a slow, creaking realisation that all these proposed measures designed to encourage irresponsible borrowing and reckless lending might not be very helpful for the financially prudent members of society who cling to silly outdated notions like ‘living within their means’ and ‘putting money into savings’. Maybe, it’s just possible, that doing something to help these people might win a few votes (and hell, who knows, it might even be healthy for the economy to encourage people to spend less than they earn).

So far Gordon Brown has mumbled a few non-commital sentences about possibly increasing the amount of money people can put into their ISA every year, which is nice, but frankly not much use when interest rates are heading towards zero. The Tory proposal to remove tax entirely from savings for all basic-rate taxpayers sounds a bit more generous, but again, if the best return you can hope for is well below 3% even without paying tax, it rings a little hollow when not so long ago banks were offering as much as 10% on cash savings.

So while it’s nice to see the politicians finally wringing their hands over somebody other than poor struggling homeowners, there’s still not much consolation for ‘risk-averse’ investors who hope for nothing more than a reasonable rate of return on their cash savings.

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