National Savings – Losing Interest

The Government backed bank has revealed that despite record inflows, outflows more than doubled to over £64 billion.

This came in a year that saw a cut in the interest payable to as little as 0.01% for savers. These low rates are very likely to stay with us for some years despite headline inflation rising and growing fears of further inflation.

From a stock market perspective, we believe that the rise in inflation is more “transitory” than permanent with many aspects of global supply and demand impacted by the stop/start/stop effects of the pandemic. Restricted supply meets peak demand.

Inflation worries have built; but the impact on markets has been muted because of the short-term demand bubble view. However, the impact of this higher inflation immediately accelerates the erosion of non/ultra-low yielding deposit accounts such as NS&I.

BRI clients are always advised to retain elements of cash dependent on individual requirements; however, increasingly we are seeing aspects such as stock market ISAs or portfolios being funded by excess cash. We have also seen an increase in enquiries from company owners / directors looking at large cash reserves and requesting advice, which can range from using resources to buy premises within the corporates pension to increasing pension contributions for directors, as well as cash management services to simply increase the returns available.