‘This will have a significant impact’
Following today’s announcement, Les Cameron, Savings Expert at M&G Wealth has said that “this could really have a detrimental effect on people’s savings”.
Les Cameron, said: “Given the current climate, a significant hike in interest rates was to be expected. More important, however, is the impact this has on savings rates and borrowing rates.
“Coupled with sky-high inflation, even with increases in savings rates, for the majority of cash or near-cash savers, their money is being eroded in real terms – now so more than ever. This will have a significant impact on those such as pensioners, who spend a higher proportion of their cash savings on energy bills and are likely to feel the brunt of the impact.
“With the UK in the midst of a cost-of-living crisis, this is going to be the case for many, and could really have a detrimental effect on people’s savings and those repaying debt which is not on a fixed rate.
“With budgets being squeezed people will inevitably look at cutting costs. It’s important to think very carefully about stopping pension contributions, as your employer may be matching these contributions which is a valuable benefit to give up. Rebuilding your pension fund to where you could have been if you had not stopped could be hard.
“Likewise, stopping any protection policies needs very careful consideration. That protection is there for a very good reason which has not changed with interest rates rising, and there is no guarantee that you’d get the same terms if you looked to restart any cover.
“Reviewing your finances and ensuring your money can be resilient against future challenges is now more important than ever. Seeking professional financial advice can be the best place to start.”
