The Bank of Mattress
Inflation has hit 5.3pc in the UK, and no savings account pays higher. The Sunday tabloids have run articles pointing out that your bed is now as good as your bank. Your mattress returns -5.3%. The Halifax Liquid Gold savings account returns -5.25%. Gold (bullion), incidentally, was up 25% in 2009.
The Office for National Statistics recently revealed that the UK savings ratio has hit a six-year high. The figures show that the average UK household is now putting away 5.6 per cent of its monthly income for savings, compared with a mere 1.7 per cent at this time last year.
Where will it all go? Unless people like setting fire to their earned money (I make that distinction) there will be a search for yield, and I expect this to be supportive of equity and commodity prices in the near term. People will also demand higher base rates from their governments & central banks, but who knows if that’s going to be even possible looking at the substantial debt burden.
