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Jan
10
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News for those Savers
Gordon Brown has announced that measures to assist savers could be included in this year's Budget, in a bid to offset the problem of low interest rates. Ahead of a speculated reduction in the current 2% interest rate this week, Mr Brown suggested that measures including increases in the tax-free allowance on income tax for pensioners or increases to ISA limits could be introduced.
MoneyFacts research has found that Nationwide reduced the rate on its Invest Direct account by 3.8% to 1.15% in 2008 – more than the total 3.5% of reductions in the Bank of England base rate. Other building societies which exceeded 3.5% in reductions on savings products include Norwich & Peterborough with its Postmaster 2 account and no-notice ISA, and Skipton with its no-notice branch ISA.
David Cameron has pledged to abolish tax on the savings income of all basic-rate taxpayers, as well as raise personal allowances for pensioners by £2,000 pa. The claims came as part of broader financial plans in the case of Conservative Party governance, including curbing the growth in public spending from 3.4% in 2008 to 2.6% in 2009, and tax breaks for companies which hire new staff.
Moneyfacts research has found that around 38% of savings accounts are now offering a rate of 1% or less on deposits of £5,000, compared to just 1% of accounts in January 2008. The website also predicted that the average savings rate will drop to the lowest level ever recorded should the base rate be further reduced this week.