Low interest rate costs savers £43 billion

Bank of England

The Bank of England estimates that savers have lost out on more than £43 billion in interest since the base rate was cut to 0.5% back in March 2009.

The Bank today held the base rate at its historically low level for the 30th consecutive month. The news is good for borrowers who have benefited from low interest rates on loans for the past two and a half years, saving more than £51 billion.

"If interest rates were low and inflation was low, things might look okay but with low rates and soaring inflation, people are being stung by a double whammy, which continues to erode the value of their savings month after month," says Ros Altmann, director general of Saga.

She believes a rise in the ISA allowance would help counteract the problem, as people would be able to save more money without paying tax.