Organising my 2012-13 UK tax return this month, I compiled the year's interest earnings. Joint current account: net interest received pounds 1.68, tax pounds 0.39. Personal current account: interest received pounds 0.19, tax pounds 0.06. Then the big kahuna, my savings account, where I really sock away what I might need for a rainy day: interest received pounds 14.10, tax pounds 3.55. Wow - at least enough to pick up a handsome selection of Quality Street . I can't be the only UK taxpayer who records these miserable bank payments in a state of rage. I could have earned more than I made in interest last year in the time it took me to type the account numbers. Such a pittance does interest income now produce that savers would appreciate the issuance of a policy statement: "Not wishing to add insult to injury, HMRC no longer requires taxpayers to humiliate themselves by reporting contemptuously small interest payments. We'll no longer dun your pathetic interest for taxes, either, as it costs us more than 6p to extract those pennies from your account." The recent economic recovery in the UK is apparently driven not only by a renewed property boom, but by savers spending their reserves - quite sensibly. With interest zilch and inflation at 2.1% - down from 5.2% in September 2011 , the highest in the history of the consumer price index - keeping cash in the bank is like stuffing your refrigerator with red meat. It doesn't accrue value. It rots. It's little wonder that rational citizens are rushing out to turn their putrefying pounds into iPads and Xboxes before the smell sets in. This is just the behaviour the government and the Bank of England have hoped for. Spending born of hysteria that money is spoiling helps to jack up the GDP stats. But the spree is a short-term windfall. Sadly, savings run out. More crucially, unprecedentedly low interest rates for five years and counting have protected debtors - mortgage holders, of course, but also this country's biggest debtor by a mile, Her Majesty's Government. Negligible interest rates so brilliantly depress the cost of servicing government debt that neither Whitehall nor Threadneedle Street has any motivation to raise them, ever. So you'd be a fool to imagine that the governor of the Bank of England is happy that unemployment is dropping to 7% much faster than expected, perhaps even by the end of this year - at which point interest rates were meant to rise. On the contrary, Mark Carney has been cool on the matter. A 7% unemployment rate will not, he's made clear, obligate him to raise interest rates a jot. The metaphorical goalposts will simply shimmy down the field, for inflation combined with an artificially farcical interest rate - "financial repression" - is a nefariously lucrative form of tax. We occasionally hear lip service paid to what a pity it is that we are "punishing savers" - in the same casual spirit in which people say: "Isn't it a shame the pub has run out of prawn crackers?" Anyone who has built a nest egg by scrimping, canniness, and self-denial - we are not talking of the super-rich here - has been railroaded into choosing between unpalatable options: 1) put capital at risk in shares. This option explains the growing stock-market bubble - money has to go somewhere. But many an investment ends in tears. 2) Watch the cash evaporate, an even more miserable exercise than watching paint dry. 3) Spend everything now. Alas, how many tins of chilli con carne can the average household stockpile? Punishing the prudent while protecting the profligate doesn't create only a moral hazard; given present demographics, it creates a hazard, full stop. We have fewer younger workers to support a steadily growing number of retired people. As life expectancy rises, the rainy day for which we all need to save could last more than 30 years. Only by being filled out with private savings and pensions - whose value is also depressed by low bank rates - does a meagre state pension provide anything close to a tolerable retirement. Beyond costing savers hundreds of billions by the time Carney says he may raise rates a tad three years hence, financial repression has cultural consequences. The Britons being bilked right now possess the character on which this country once prided itself. They are self-reliant sorts who plan for the uncertainties and calamities that may lie in wait, and they don't expect to rely only on the state. These are the people being told effectively that saving for the future is a mug's game. Cash assets already preclude a host of benefits. When the best assurance of a helping hand is going broke, the nest egg is a ball and chain. With a mere 3% inflation rate, which the UK has exceeded for most of its postwar history, prices double in 23 years. The compensation wouldn't make anybody wealthy, but at least a 3% interest rate would allow people who intend to cover their own emergencies and old-age care to keep what they've earned. Instead, they are being steadily robbed, and nobody in the government or central banking gives a damn. But the government will give a damn when it has to cover the costs of a whole generation of formerly thrifty, conscientious Britons who have nothing because they have saved nothing. Lionel Shriver's latest novel, Big Brother, was published in May
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