The headline is odd , so is the article. Are people mugs wanting liquidity?
I have a healthy balance in my account to meet emergencies, not just for me but for my family. Has Barclays heard of the Bank of Dad? Well there’s the bank of Uncle and Grandad and to all kinds of people who are dependent on the liquidity of family money-winners. Some of us like to help what we might call “good causes”, “charity” or “the needs of others”. We want liquidity to pay other people’s bills as well as our own.
Deposits offsetting mortgages.
What some smart people do, people who have property is to have a drawdown mortgage. I have one with First Direct where I only pay interest on the portion of my mortgage that isn’t covered by cash in my current account. I bet my bank balance is part of the £614 bn Barclays identify as not working. Let me comfort my inner sense of worth, my cash in the bank is offsetting mortgage interest (high at the moment) and providing me and my loved ones with the comfort that there is money in emergency.
But there may be other priorities to Barclays! Emma Dunkley, who is not a fool reports…
“Investing can deliver better financial outcomes for individuals and supports economic growth,” said Sasha Wiggins, chief executive of Barclays Private Bank and Wealth Management.
Having assumed that people are so foolish as to forget that investment in the long term is the way to meet long term bills (like the bills of older age), Sasha goes on to tell us
“However, the UK’s investment gap has grown by over 30 per cent in just two years, emphasising that significant efforts are still required to transform the UK into a nation of investors.
Sasha, the cost of borrowing is high but the returns on deposits are high too. Right now people are getting a real return on high-return savings accounts and many like me are offsetting against their accounts. In early 2022 money was not expensive, then something happened almost exactly 3 years ago – in September 2022 money got a lot more expensive for ordinary people. Barclays get this
Barclays said that the “most significant” economic factor fuelling the growth of cash savings over this period was the rise in interest rates, which jumped from 1 per cent in May 2022 to 5.25 per cent by May 2024. The increase in rates lured more people into cash, as well as boosting the value of savings through accrued interest. Barclays calculates that cash savings would have risen by about £35bn in 2022 due to interest rates alone.
If I (a survey of one – two including my partner) are anything to go by, the capacity of economic events to spike interest rates is immense and we (partner and I) both keep liquidity because we are both banks to others. Until we feel comfortable with the capacity of Britain to progress sensibly, we will keep money in readiness to help others and keep borrowing down.
We laugh at this statement
The government is also keen to channel more cash into the UK stock market through reforms that include allowing banks to send investment ideas to savers with cash sitting in low-interest accounts, and launching an advertising campaign to promote the opportunities of investing to consumers.
I am aware of opportunities in the UK, I have a large amount invested in small companies that are unlisted – AgeWage and Pension PlayPen for example. I would like to invest more through investment companies and will do so when they become more accessible through the pension investments I have through workplace savings. Tell me why I should be making it hard for myself to act when there is a financial services industry that is supposed to be helping me?
We’ve put away part of the £35bn increase in useless cash found by Barclays
The excess amount, which Barclays said was based on people who already hold more than six months’ income in cash, underscores the challenge facing the government as it tries to funnel more money into investments.
But I’m sorry, the Government and financial services do not figure high on our priority list
Parts of the City, including asset managers and banks, could benefit from more inflows into higher-fee investment products.
People are not mugs, they invest through pensions and they invest into real assets when they feel comfortable doing so. People are unsure about the value of their houses (oh and classic boats – Lady Lucy’s still for sale!). They are worried about cashflow with threats of greater taxation in the air.
We do not feel comfortable and we know that the City is not short of money. We put the City second because – bless them – we don’t think they put us first!