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Monday, March 14, 2016

Help To Save

Apparently, if media leaks are to be believed, one of the policies that the Chancellor will unveil in this Wednesday's 2016 Budget will be the Help To Save scheme.

Aimed at low paid workers, it would provide a 50% bonus to those who manage to save up to £50 a month at the end of two years.

Around 3.5m people in low paid work and receiving working tax credit or universal credit would qualify, with the maximum level of help set at £1,200.

Whilst this idea is all very well and middle class patrician, it has two significant failings:

1 People won't get their bonus until two years have passed. Unlike the middle classes, those on low pay don't have the luxury of being able to plan ahead for two years wrt what they can safely put away for a rainy day; as more often than not every day is rainy.

2 Central banks are currently obsessed with negative interest rates, designed to discourage people from saving. This policy is the diametric opposite of that.

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