Possible rise in government savings guarantee
April 8, 2008
According to a recent report there could be a rise in the level of savings that the government will guarantee by 100% by the end of the year, which means that savers might be able to enjoy even greater security. The level of savings that the government provides with a 100% guarantee has already risen since last summer as a result of the Northern Rock crisis, which saw savers withdrawing over £2 billion in savings over the course of a few days.
Prior to the Northern Rock crisis the level of savings guaranteed by the government stood at £2000. After this there was only a partial guarantee on additional savings. This concern, given the fact that many people were worried that Northern Rock was on the verge of collapse, resulted in the billions being taken out of the bank, which added to the crisis that Northern Rock suffered last summer. After the Northern Rock incident the level of savings that the government agreed to guarantee by 100% rose to £35,000.
In recent reports it has been suggested that the government could even increase the minimum guarantee on savings to £50,000 by the end of the year. This decision has also received the support of the British Banker’s Association, which has recognised the need to increase consumer confidence in the banking and savings sector. The new figure of £50,000 is a far cry from this time last year, when the 100% guarantee only applied to the first £2000 of savings.
The increased savings figure has been put forward by the Financial Services, which will be compiling a report in May. There will also be an increase in the level of savers covered by the guarantee, which will rise from the current 96% to around 98%.
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