Whilst the rich get richer, the poor struggle to survive, is an axiom that has applied for centuries. And it seems the Brave New World of the 21st century is no different to its forerunners. As the credit crunch begins to squeeze ever harder, those who have money to put aside are revelling in the abundance of high interest savings accounts and current accounts that are flooding the market at present.
Whilst mortgage rates continue to rise and food costs spiral, the banks and building societies have launched a series of accounts paying well over the Bank of England base rate, and some even topping 10%. Eager to attract money through their doors as the money markets become ever more expensive, financial institutions are keen to secure a source of income for themselves. The Halifax launched a new Regular Saver last Monday which pays up to 12% for those fulfilling all its conditions, whilst the Skipton, Bradford and Bingley and Manchester Building Society all offered ‘best –buy’ rates this week.
An analyst from comparison firm Moneyfacts, Michelle Slade, advised consumers to jump on the bandwagon, saying, ‘Anyone with money to save should take advantage of these superb rates. Who knows how long they will last?’. She was less optimistic about the prospects for mortgage customers, and others borrowing money, however. ‘They have been dealt further blows as lenders such as Halifax, Abbey, Bradford and Bingley, and Nationwide have all announced increases to their rates.’
Meanwhile, the cost of living continues to soar. Research carried out by the Daily Telegraph and moneysupermarket.com shows the average family having to cope with inflation that is running twice as high as the official figures would have us believe. The paper puts the Real Cost of Living Index (RCLI) at a high of 9.5%, although the Consumer Price Index (CPI) estimates it at a mere 3%.
Many analysts are now comparing the period we are living through to that of the seventies. Philip Hammond, the Treasury spokesman for the Conservative party said, ‘Hard-pressed families will now be more squeezed than ever as record factory gate prices feed though into higher prices at the pumps and in the shops.’ His Liberal Democrat equivalent, Vince Cable, was even blunter. ‘At a time when the British economy is slowing down, inflation is also steadily increasing. It now seems we’re back to 1970s stagflation.’
Stagflation, which is a situation where inflation is rising at the same time as the economy is slowing down, is a spectre that haunts many. Employers group the CBI has warned that the UK is heading for a ‘very prolonged period of very sluggish growth’ well into 2009, though it falls short of predicting a recession. Director General of the CBI, Richard Lambert, said, ‘Our best bet is still that there will be a measure of economic growth in 2009. But the outlook has deteriorated in recent months, and considerable uncertainties remain.’
For those on the fringes of society, the prospects are already grim. A new Government report reveals that the number of children living in poverty rose for the second year in succession, whilst pensioner poverty increased for the first time since 1998. Mervyn Kohler of Help the Aged described the figures as ‘a disgrace’, saying, ‘We are watching more and more pensioners drop further below the poverty line.’ The Government called the figures ‘disappointing’ but claimed that the government had made significant progress on eradication child and pensioner poverty. James Purnell, Secretary of State for Work and Pensions pointed out, ‘Had the government done nothing other than simply uprate the tax and benefit system, we estimate there would have been 1.7million more children and 1.5million more pensioners in poverty today.’
It seems that despite our modern world, we still have not progressed very far. As the Apostle Mathew put it in Biblical times, ‘For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.’