Sunday, October 05, 2008

How to force the UK Government to give 100% guarantee on your deposits

... Transfer all your money to National Savings and Investments.

Their guarantee:

"Backed by HM Treasury
100% secure


National Savings and Investments is backed by HM Treasury, so any money you invest with us is 100% secure."

The Easy Access Savings Account can take up to £2 million per person. In all, depending on your age, NS&I could take more than £6 million per head.

If enough people know about this, and act on it, only Northern Rock will be run-proof. HMG will have to provide an "Irish guarantee". Unless, of course, the Chancellor suddenly welches on government credit, and that really would be the end; or closes the door to new NS&I deposits.

Total retail deposits in the UK are now around £1.17 trillion, of which nearly half is not covered even by the £50,000 deposit protection limit that came into force on October 3rd. So if everybody takes appropriate action, NS&I (and/or Northern Rock) should expect an influx of about £468 billion pounds.

Funds invested in NS&I stood at £84.8bn in 2007/08. A full-scale "flight to safety" would entail an abrupt 550% increase in their deposits.

Get in while you can?

But not into Ireland:


However, experts are already raising questions over the Irish scheme, and asking how much protection it really affords. Adrian Coles, the director general of the Building Societies Association, said savers should write to the Irish Embassy to ask them how they intended to guarantee UK savings, and how they would obtain enough sterling in the event of a bank failing.

"Has the Irish government quantified the potentially huge liabilities it is taking on by guaranteeing sterling deposits in Britain, where household cash savings amount to £1.1 trillion?" he said.

"Savers should beware that, if they switch accounts to take up this guarantee, they are effectively betting on the Irish government's ability to buy sufficient sterling in the foreign exchange markets.

10 comments:

Hairy Arsed Bloke said...

The Inland Revenue must be eager to take on the extra work load of chancing down the details of loads more overseas accounts! With the prospect of higher taxes, falling exchange rate, lower returns on deposits with risky domestic banks, the movement of funds overseas could catch on big time.

James Higham said...

Unless, of course, the Chancellor suddenly welches on government credit, and that really would be the end; or closes the door to new NS&I deposits.

That, of course, is not beyond the boundaries of possibility.

Bill Quango MP said...

Time to pop down to the Post Office where they deal with all the NSI savings and investment accounts and their own financial products are backed by ... Bank of Ireland.

Post Office are lobbying the government to make allow them back to being GIROBANK. I wonder if the crunch helps or hinders this move?

dearieme said...

A bit OT, Sackers, but too good to miss. Yesterday's Telegraph has Iain Martin reviewing a former Labour lackey's book about the Callaghan years.
"..the mental collapse of Sir William Armstrong...the most senior civil servant in the land. He ranted and raved on the carpet of Number 10... Taken straight to hospital for treatment, he was then retired....
Armstrong was then made chairman of the Midland Bank."

Sackerson said...

We're considering it - lump sum into easy access, monthly saving into premium bonds. Stuff the banks, they've stuffed us all.

UBERMOUTH said...

Until they secretly re write their policies, without letting anyone know.

I heard it's best that people put their money into land.

UBERMOUTH said...

Until they secretly re write their policies, without letting anyone know.

I heard it's best that people put their money into land.

Sackerson said...

Hi, UM: if you mean, dig a hole in the back garden and drop it in, I think you could be right.

Sackerson said...

... seriously, though: good quality farmland looks to be a valuable asset because there's less of it every year, and the world population is increasing (and very keen to eat better - and eat more meat). Generally, when there's concern about inflation (or the very survival of the currency), things you can touch (and things that last, rather than wear out) become more in demand; especially if they create an income, or supply something that is needed even in hard times. Not that I'm making any recommendations, you understand, and in any case one should always look to get things at a bargain price.

Sackerson said...

DM: interesting, and look what happened to Midland Bank.