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Savers Lose 43 Billion

Savers have been stealthily robbed of £43bn of the real value of their savings since the Bank of England froze interest rates at 0.5pc nearly 32 months ago but there could be worse to come.

That’s the total shrinkage of bank and building society depositors’ purchasing power caused by inflation, according to the pressure group Save Our Savers , following last month’s calculations by Yorkshire Building Society that the average saver has lost £2,500 in real terms since the credit crisis began. Pensioners have suffered even more because higher than average proportions of their fixed incomes are spent on food and fuel.

They are the largely silent victims of the Bank of England’s policy of running negative real interest rates. Now, as if that slow motion bank robbery does not seem bad enough, independent experts say history suggests the crisis in the eurozone could cause inflation to rise much more rapidly in future as governments take desperate steps to avoid a global slump.

Mike Warburton of accountants Grant Thornton told me: “This may be a good time for your readers to recall what happened in 1914, especially since it is Armistice day on Friday. After Archduke Ferdinand was assassinated in Sarajevo the financial markets froze and, as an emergency measure to inject liquidity, the main central banks agreed to take part in a form of quantitative easing.

“It worked, in that the markets recovered to some form of normality and operated throughout the war, but it came at a price. Until then inflation had been very low and stable. The impact of quantitative easing came out in due course as inflation.

“My fear is that the same thing will happen to us. It seems that all the warning signs and political manoeuvrings were ignored by the financial markets and policymakers until the problem hit them in the face. I can’t help thinking the euro crisis is drifting in the same way.”

via Savers lose £43bn in ‘slow motion bank robbery’ with worse to come – Telegraph Blogs.

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