[email protected]: Vince Cable – Let’s make a virtue out of thrift again

Over at the Mail on Sunday, Lib Dem deputy leader Vince Cable ponders the question he is asked every day: why are profligate borrowers being rewarded by lower interest rates while thrifty savers suffer? Here’s an excerpt:

Interest rate cuts were unavoidable, though they have reached their limit and other policies are now more important – especially getting credit flowing to sound companies. Of course, it is necessary for the economy that people should spend, sensibly, since this also creates production and employment for others. There is a danger that fear is leading many people, and companies, to hoard excessive cash – behaviour which damages the economy. But it is also necessary to have a savings culture that enables people to put down a deposit on a house, pay for a comfortable retirement or provide for a rainy day. …

How can savers be helped and protected in this financial crisis? … I would concentrate instead on lifting low-income pensioners out of the tax net altogether. It is vital, too, to reform means-tested benefits, such as pension credits, which punish savers. We must raise the State pension to a decent level, linked to earnings, so that savers are not caught in the means test trap. … Most important of all is financial stability. Inflationary boom is as bad – or worse – for savers as deflationary bust. … While policy-makers throw untold billions of pounds at our crisis-hit economy, the plight of the saver must not be overlooked.

You can read the article in full by clicking here.

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