Savers leave National Savings as flight to high rates beats flight to safety
Savers are now looking for the best rates on the market, after the financial crisis led Brits to look for the safest place for funds.
The annual results from National Savings and Investments (NS&I) show a massive inflow of savings during the financial crisis, but a flow out now as savings rates drop and savers demand higher interest rates.
The government backed savings provider now states the flight to safety is now over.
Over the first quarter of 2009/10, £3.2 billion headed into NS&I but £4.5 billion headed out.
For 2008/09 some £26 billion went into NS&I and £16.1 billion of outflow. The resulting gain in funding was £12.5 billion.
In the first quarter of this financial year, it was down £1 billion.
Jane Platt, NS&I chief executive, said: "The global financial crisis, which began last September, meant that demand for our products increased dramatically despite us cancelling all discretionary marketing."
She added NS&I was now looking to balance between offering a fair rate to its customers, delivering cost-effective finance to the government, and the need to support stability across the wider financial services marketplace by maintaining an appropriate competitive position.
"Over the coming year we will continue to strike this three-way balance in all of our pricing decisions and to ensure that, in tandem with this, we maintain the efficiency of our operations," Ms Platt said.
Over the crisis, competitors had claimed NS&I had an unfair advantage in the market as all finds are guaranteed.
The Building Societies Association (BSA) complained in May about the "unfair advantages" nationalised and state-back saving providers had.
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