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Home  »News  »Finance News

Should the government do more to protect our savings from inflation?

16/07/2010

The recession may have ended but, with so many cut-backs in the workplace, putting money into our savings account isn't always easy. Despite this, most of us scrimp and save to ensure we have some money put aside at the end of each year. Now, research from Moneyfacts has revealed that the increase in VAT, announced by the government in the emergency Budget earlier this year, could affect our savings. The organisation claims the VAT increase could stunt any long-term reductions to the Consumer Price Index (CPI). Inflation figures show that CPI has fallen marginally to 3.2 per cent, which is above the government's two per cent target. The effect of inflation is made even worse by the tax charged on savings interest, Jason Riddle, co-founder of action group Save Our Savers, said. "Save Our Savers is calling on the government to introduce new ways for savers to protect their savings from inflation and to commit to ending taxation on interest income for at least the first £5,000 of interest received, in order for all savers to gain relief from this unjust tax," he added. Make sure you visit our financial offers page for the latest deals available. Posted by Jez Walters

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