The country was taken by surprise today by the decision of the Bank of England to make a dramatic cut in interest rates.
The base rate was slashed by 1.5 percentage points to 3%. This is the largest single cut it has made since it was made independent from the Treasury in 1997, and the rate is now at its lowest since the early 1950s.
Britain’s 7th largest bank, Alliance & Leicester, is to be bought by Spanish bank Banco Santander, it has been announced. This is likely to mean an A&L merger with Abbey, which Santander bought in 2004.
Research has shown that, despite recent reductions in the Bank of England interest rate, banks are increasing the rates customers pay on overdrafts.
The UK payments association APACS has announced a new banking payment system which will allow transfers between many bank accounts to be almost instantaneous.
New industry figures from Apacs show that the use of cheques continued to decline in 2007, with the year showing the fastest fall in use since their peak in 1991. In all, 1.6 billion cheques were issued, representing a 9% drop over the previous year.
Research from Sainsbury’s Bank suggests that UK bank account holders have over £13bn of surplus cash sitting in current accounts paying a paltry 0.1% in interest.