Still, we should not get too excited. The gain is illusory. What's happening is the effect of the much-reduced investment income in 2009-10 feeding through to PAYE codes for the new tax year in the form of higher tax-free allowances, thus boosting net pay. But, in reality, savers remain losers - nominal interest rates mean nominal interest received, whatever happens to take-home pay.
The government is a loser, too - it will have only nominal interest income to tax. Yet, in the way that only governments can, Gordon Brown is making a virtue out of this by grabbing the opportunity to substantially raise annual allowances for Individual Savings Accounts (Isas) in last week's Budget. Because interest rates are so low, the government can afford to seem generous since it loses little tax on interest that slips beyond its reach behind an Isa shelter.