Record low interest rates and multibillion-pound emergency support measures from the Bank of England are losing savers nearly £18 billion a year, according to new research.
High levels of inflation, which has been kept higher by the Bank’s £325 billion quantitative easing programme - combined with low interest rates on savings and current accounts has caused a severe decline in the value of the nation’s savings.
Even traditionally higher interest savings accounts such as ISAs are below inflation, at an average of 2.6% interest per year, accountancy network UHY Hacker and Young said.
As the cost of living continues to rise, money in these types of accounts, or in any account with interest rates below inflation, will actually decline in value monthly, the report said.
Mark Giddens, partner at UHY Hacker and Young said: “Savers are losing a staggering amount of money.”
He added that the intervention by central banks to keep interest rates low feeds through to deposit rates and ensures that savers are unlikely to see rates raised in the near future.
There is a lack of big competitors in the market for high-street savers, but Mr Giddens urged people to shop around to get the best rates for their savings.
He said: “The onus is very much up to the consumer to do their own leg-work and find the best savings for themselves.”
Ros Altmann, director-general of over-50s group Saga, said: “The Bank of England’s policies have been a disaster for savers in general and pensioners in particular.
“Most of those with savings or pensions have seen their income decimated by policies that have tried to help borrowers and banks, at the expense of those who tried to put money aside for their future.”
She added: “Quantitative Easing (QE) is a massive monetary experiment that has not clearly boosted the economy as intended but instead has boosted inflation and damaged pensions.”