Monday, 18 March 2013

Cyprus banks euro tax bail-out is a small-scale smash-and-grab compared to Britain’s slow-motion bank robbery

"Outrage about the Cyprus banks euro tax bail-out should not be allowed to obscure the fact that millions of savers in British banks have already lost much more of the real value or purchasing power of their money to prop up financial institutions closer to home. Savers in British banks and building societies have been stealthily robbed of more than £43bn of the real value of their savings since the Bank of England froze interest rates at 0.5pc four years ago. That's the total shrinkage of bank and building society depositors' purchasing power caused by inflation exceeding frozen interest rates, according to calculations by the pressure group Save Our Savers, following similar calculations by Yorkshire Building Society that the average saver has lost £2,500 in real terms since the credit crisis began. Both figures have got much bigger than they were a couple of years ago, as inflation has continued to run ahead of interest paid on deposits. 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. But this slow-motion bank robbery is more difficult to describe than the short, sharp, smash-and-grab in Cyprus. So, despite the best efforts of this column to blow the whistle, more attention will be given to smaller losses for fewer people in Cyprus than millions of savers and pensioners who have lost much more in British banks and retirement funds."

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