Will Gord get the blame as incomes are slashed?
What a difference a day makes? Yesterday morning’s main article featured the front pages from mostly the right wing press which were full of plaudits for Brown’s mortgage rescue plan. Today there’s a new side of the economy featured that threatens to undermine the living standards of millions and millions of voters. For it has taken another drastic cut in interest rates for the media finally to pick up something that I’ve been raising here for months – the position of savers in the recession.
For with interest rates plummeting to almost zero the millions and millions who have built up nest eggs for their retirement are going to find that it produces next to nothing in income. On top of that are the millions of people who are coming to the end of their working lives who’ll discover that their retirement pension pots, which sounded so large, will produce only a pittance in annuity terms.
This will have many consequences. Many in their early 60s who had been looking forward to retirement might have to postpone it and remain within the labour market thus reducing the opportunities for others down the line. We are going to see more pensioner poverty and more demands on the state as people are not able to fend for themselves in the same way.
People still in work who have elderly parents alive might find more demands being made on them.
The political question is who will get the blame and when will this start to happen? It’s hard to see the government escaping unscathed because these age groups have much more political clout than others for the very simple reason that they are much more likely to vote.
What I find amazing is that you hear so little from politicians of all parties about the potential plight of these critical voting groups. The political impact is only just starting as savers receive the notifications from their banks and building societies that rates and their incomes are being slashed.
The government’s two great innovations for pensioners, free bus travel nationwide and the winter fuel allowance look derisory when set against a collapse in your monthly income. I think that this will hurt Labour very badly though it might take a few months for this to be picked up by the polls.