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Savers Urged To 'Eat Into' Reserve Funds (Sky News Online)

28 September 2010

In brief:
Savers should be ready to "eat into" their reserve funds to help get through the current period of low interest rates, a senior Bank of England official has said...

Taken from Sky News Online. Click here to read  the article in full

FRP Advisory comments:

The recession should have signalled the end of the binge borrowing and excessive spending culture – so it is worrying that cautious individuals who have put some money aside for a rainy day, or their later years, have been advised to throw caution to the wind and dip into those savings in an attempt to prop up an ailing economy.

For years we have witnessed unprecedented borrowing levels by individuals. This – and the consequent spending that took place – was largely to the benefit of the High Street, but also contributed to a rising number of personal insolvencies.

 We have also seen unprecedented levels of public sector borrowing. In the same way that the Government’s Comprehensive Spending Review (CSR) will cut spending to ensure the state reduces its debt levels, as a society we also need to learn to live within our means. Now that over-committed consumers are unable to prop up the High Street, cautious investors should not help to boost the economy by raiding their own savings pot.

David Thornhill 

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