ii comments on the NS&I annual report
With a £22 billion black hole in public finances to fill, the government might lean on the NS&I even more to raise enough money for the Treasury, says Myron Jobson.
30th July 2024 13:40
by Myron Jobson from interactive investor
Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The government-backed savings bank smashed its £7.5 billion fundraising target for the 2023-24 tax year, which is largely due to the success of its competitive savings products as well as the ongoing popularity of its lottery-style Premium Bonds. In particular, its one-year guaranteed bond, which launched last summer, was a roaring success, attracting an unprecedented amount of savers’ cash before it was quickly pulled.
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“The net financing target is higher for the current financial year at £9 billion. But with a £22 billion black hole in public finances to fill, the government might lean on NS&I even more to raise enough money for the Treasury – but it would need to do so as cost-effectively as possible.
“This could translate to the NS&I not being heavy handed when it comes to cutting rates and remaining competitive during the interest rate cut cycle, or the Premium Bond prize rate not deviating much.
“More broadly, with a cut in the base rate a question of when, not if, the best savings rates are on borrowed time. Those who can afford to put money away for at least five years or more should consider investing for the potential of long-term, inflation-beating returns that far outstrip savings rates.”
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