Forget borrowers: help the savers

YOU reported last week that Britain’s business leaders were demanding that the Bank of England should “slash rates by a full point” to head off a deep recession. However, is it not the case that American interest rates are lower than ours and that country is still heading into a deep recession? Is it also not the case that, irrespective of the government’s intentions, the banks remain unwilling to pass rate cuts on to borrowers, preferring to concentrate on rebuilding their balance sheets?

I am one of many savers facing a future funded by an inadequate pension, who has seen the interest on my accounts this last year wiped out by inflation. When rates are cut, where will be the incentive to save in a country which, like America, now has a zero savings ratio?

I appreciate that the British economy is reliant on consumers, but look where that has got us.

Instead of unbridled consumption funded by debt, we need to see more saving and less borrowing. This would undoubtedly reduce consumption and economic growth, but that is what we need.

We are enduring a necessary economic slowdown due to the immense damage that cheap, unlimited credit has wrought. We do not want more of the same.

David Milburn
North Elmham, Norfolk

Banks are still squeezing small firms

YOUR article “Despair over loan freeze” last week looked at the problems small firms are having in raising funding. I particularly noted the reported comments made by Steve Cooper, managing director for local business at Barclays. He said that Barclays would pass on the full benefit of lower borrowing costs to small firms as base rates and lending rates between banks fall.

What he did not mention was that without any negotiation or discussion Barclays has already racked up the overdraft rates paid by thousands of small firms.

I run an accountancy practice and our overdraft facility is “rolled on” each March. I received a letter in September informing me that our overdraft rates were increasing on October 8 from 4% above base rate to 7% above base rate.

My local manager said he had about 75 other cases like me, and I personally know of another small local business that has had the same treatment.

I believe that Cooper’s comments at the very best were misleading. Clearly, the banks are just paying lip service to government requests to help smaller businesses.

Bearing in mind that it’s our money that bailed out the banks, Gordon Brown and Alistair Darling should be jumping all over them.

David Harrison
Cookham Dean, Berkshire

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