Industry round-up: what's happening in the cash and savings market?

After 15 months of lockdowns, restrictions and gloomy news headlines, the summer of 2021 saw us finally begin to emerge into what we all hope is a brighter future.

Obviously, businesses and individuals alike still face a number of challenges, as evidenced by the ongoing lorry driver shortages and the subsequent effect on the supply chain. The spate of panic-buying that emptied petrol stations across the UK particularly showed that our optimism is still somewhat fragile.

However, as the pandemic slowly begins to exert less and less influence on our daily lives, and normality begins to creep back in, our examination of the cash deposit and savings market reflects some of this early optimism, and reveals some interesting trends and insights.

At the height of the pandemic, businesses faced huge economic challenges, set against a backdrop of a rapidly-changing and unpredictable environment. Ensuring cash deposits were secure understandably became a priority.

For those with a larger savings buffer, spreading deposits across a number of accounts allowed businesses to take advantage of FSCS protection of £85K for each UK account opened. However, our latest findings reveal an emerging trend of clients moving away from a behaviour of FSCS diversification, and instead placing their cash into accounts that provide the market-leading interest rates.

As the country begins to open up, the UK savings market has mirrored growing public confidence, seeing interest rates rise across the board for a fifth straight month. 12-month fixed-term deposit accounts have especially been a focus, seeing increased popularity and competition.

This rate-driven behaviour suggests many investors have been buoyed by the firmer economic footing and are seizing the opportunity to boost their funds or offset suppressed income. Approximately 30% of the deposits placed in September were unprotected, further highlighting the demand for greater returns over protection.

The market is also keeping a close eye on the imminent launch of NS&I green bonds. Announced by the government in the 2021 budget, the green savings bond is designed to enable UK savers to help fund environmentally-focused projects.

The launch announcement is expected to coincide with Rishi Sunak’s Autumn Budget on 27th October and reveal that investors will be able to deposit up to £100,000 in a three-year fixed-term deposit account, although the rate potential investors will receive is yet to be confirmed.

Flagstone is the UK’s leading cash management platform, giving organisations and individuals access to hundreds of accounts – including exclusive and market-leading rates – from up to 50 banks, through a single Flagstone account.

To find out more about how we can help you grow your funds, speak to us today.

For insight into businesses behaviours within the cash deposit market, take a look at our State of the Deposit Market for UK SMEs Report.


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