U.K.'s Year of Record-Low BOE Rates Leaves Savers Frustrated

(Bloomberg) -- One year on from the Bank of England's post-Brexit vote stimulus package, U.K. savers are frustrated and worried.

While BOE Governor Mark Carney credits the decision to cut the benchmark rate and boost asset purchases with bolstering the economy, not everybody is so pleased. Research by ING shows 44 percent of consumers surveyed say they're frustrated by interest rates at a record low and almost a third say they're saving less.

“The low interest rate environment has seen some consumers part with their cash more readily, indicating that the Bank of England's move to slash interest rates has had the desired effect,” Ian Bright, managing director of global research at ING, said on Thursday. However, “in the long-term, the strain of low interest rates has left people in a more fragile financial position.”

Strong consumer spending played a key role in the economy's resilience after the June 2016 vote to leave the European Union and remained one of the main drivers of the second-quarter's more muted 0.3 percent growth. But with inflation outpacing wage growth, there is concern that consumers might not be able to shoulder the burden for much longer.

Britons saved a smaller proportion of their incomes than at any time on record in the first three months of the year. That's good news for spending but leaves households with less of a cushion if they face further financial shocks.

BOE officials left the key rate at a record-low 0.25 percent on Thursday, although two of the eight policy makers called for an immediate increase of 25 basis points. They also revised down their forecasts for the household savings ratio through 2019. At 3 percent or below, all the estimates are less than half the 8 percent average between 1998 and 2007.

--With assistance from David Goodman

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, David Goodman