Monday 6th of April 2009
Britons are choosing to reduce what they owe rather than save as a result of low interest rates, it has been observed.
Lloyds TSB UK chief economist Trevor Williams explained that borrowers are switching their attention to debt management, as savings offer low returns.
He suggested that consumers are borrowing less in the current economic climate, paying off loans with their spare cash.
Noting that debt management habits have been changing, Mr Williams remarked: "If you borrow less, then effectively you’re saving more. In that sense, you’ve a situation where savings income has fallen but savings rates have gone up."
The Bank of England’s monetary policy committee has cut the base rate of interest in each of its last six monthly meetings.
It now stands at 0.5 per cent and an Adfero poll of nine economists, financial institutions and businesses organisations found that all nine expect it to be held at that level this week.
