Commenting on today’s Budget, Neil Lovatt, commercial director at Scottish Friendly, comments:
Rishi has today reaffirmed his commitment to supporting UK households and businesses in the coming months by continuing to print more money to support the government’s stimulus packages. During 2020, the money supply in the UK skyrocketed and Bank of England data shows that as of November, households were sitting on £1.6 trillion – a £120billion increase from February.
Until now, this increased money supply has not impacted on prices as a lot of the extra cash has been sitting idly in bank accounts. But with restrictions beginning to ease from March and the government doing its best to spur economic activity, the dam that has been holding inflation back could soon be about to burst.
If interest rates are kept low, there is a real risk that inflation could rise rapidly above the Bank of England’s 2% target and be difficult to control. If this is allowed to happen, then it will be UK households who bear the brunt of its force. Anyone who has money with a bank or building society, could see the real value of their savings eroded in a relatively short space of time.
The inflationary alarm bells are ringing and households should be considering where they might find safer ground, for example in real assets such as commodities and equities.
On contactless card limit increase from £45 to £100, Kevin Brown, savings specialist at Scottish Friendly, said:
Increasing the contactless card limit to £100 is recognition that digital payments are now the preferred choice of most consumers and businesses.
The volume of UK cash withdrawals and payments has been in steady decline for some years, while the number of cash machines has also dwindled.
However, what must not happen, is that by encouraging contactless payments we restrict free access to cash for those individuals who still rely on it. Many parts of the UK have become cash deserts as ATMs have disappeared and local bank or post office branches have closed.
Financial services providers need to support customers who are still adjusting to different ways of managing their money. More people are now using mobile and online banking, as well as contactless payments, and the advice and guidance to those who need it must be there.”