UK savings predictions for 2010

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by: MarkeD
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Word Count: 390
Date: Wed, 17 Mar 2010 Time: 12:35 AM
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2009 was a year weary of recession with savings rates reaching historic lows and prospective savers needing to shop around and/or parting with their money for some time in order to benefit from the best rates available. As the UK continues out of recession, things are likely to improve - but when, where and by how much are the questions most financial spectators are asking.

With the base rate firmly remaining at 0.5 percent since March, it is fair to predict that if it does move at all over the next year it is likely to go up. Yet this is not a certainty. Other countries faced with similar economic problems have set their rates even lower - with the US opting for a 0.25 base and Japan having an even lower 0.1 rate both since December 2008, as well as the ECB being held at 0.25 percent since last May.

With that in mind, many economists (as well as the Centre for Economics and Business Research) believe the 0.5 rate could stick around for the duration of the next year, with the soonest change predicted by some to be a rise to 0.75 percent in September, and perhaps up to 1.0 percent by the turn of 2011.

So with these predictions for the base rate in mind, where is likely to be the best place to look in order to get the most from our savings in the new year. Although there has been something of an upturn in savings rates on standard instant access accounts, as long as the base rate remains at 0.5 it will likely be fixed rate bonds and notice accounts that will give prospective savers their best return. Simply, if you can afford to put some cash away for a year or two (or five), you may get a far better rate than that offered by some easy access accounts.

However, those prospective savers who may potentially lock their money away in the New Year are also being urged to consider inflation. Although not the opinion of the CEBR in the 2010 top ten predictions, others are pointing to the government's recent Quantitative Easing (QE) program and its possible affect on inflation. This could mean savers will get less from their fixed rate savings, while the base rate and therefore easy access rates may be dragged up.

About the Author

Paul Roberts writes about bank savings and fixed rate bonds fixed rate bonds.