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Bank of England sticks with 0.5% base rate

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Britain's savers may look to relocate in Europe and make use of money transfer companies as the Bank of England has stuck to its guns and kept the base rate at its historic low of 0.5 per cent.

This move comes despite growing fears of inflation, with the cost of living drastically rising across the UK.

Conversely, the group's continental counterpart, the European Central Bank, has raised its rates across the eurozone from 1.25 per cent to 1.5 per cent in a bid to combat perceived inflation in the region's larger economies.

In the UK, the Bank of England's monetary police committee (MPC) voted to keep rates at 0.5 per cent for the 29th consecutive month to avoid putting pressure on those in debt.

The MPC fears that the economy could slip back into recession if the country's largely indebted population were put under a greater debt strain.

Gross domestic product (GDP) failed to see any growth over the final three months of 2010 and the beginning months of 2011.

However, the services sector, which makes up 70 per cent of GDP, saw signs of growth as the PMI index limped up from 53.8 to 53.9 - with any rating above 50 indicating growth.

The news will bring scant comfort to savers though, with the consumer price index measure of inflation reaching 4.5 per cent.

This translated into cost of living expenses that threaten to diminish the value of UK savings, with the British Retail Consortium saying that food prices were 5.7 per cent higher in June than in the same month last year.

Some concerned Brits have put together the Save our Savers organisation and written letters to each member of the MPC.

The group calls for the Bank to live up to its obligation to keep inflation stable and low, saying that the MPC's inaction was making it more difficult to save.

"A country without savings is a country without a future," read the organisation's letter.

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