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Loan Insurance: Government should 'protect' savers from inflation

The government should do more to help savers protect their investments from inflation, it has been claimed.

Inflation figures show that Consumer Price Index (CPI) has fallen marginally to 3.2 per cent, but it is still well above the government's two per cent target.

The high rate of inflation combined with the historically low base rate of 0.5 per cent decreases the value of savings.

Jason Riddle, co-founder of action group Save Our Savers, expressed his belief that the effect of inflation is made even worse by the tax charged on savings interest.

He said: "Save Our Savers is calling on the government to introduce new ways for savers to protect their savings from inflation and to commit to ending taxation on interest income for at least the first £5,000 of interest received; in order for all savers to gain relief from this unjust tax."

In order to combat the effects of inflation, Moneyfacts found that a basic rate tax payer needs to find an account paying four per cent, while a higher rate tax payer needs to find an account offering 5.33 per cent.

The firm also revealed that the increase in VAT could stunt any long term reductions to the CPI.

Posted by John Fieldman

Having worked in the city for 19 years, John's main focus is interest rates and corporate financeADNFCR-2776-ID-800003159-ADNFCR

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