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NS&I to expand offering to savers

NS&I will substantially expand its balance sheet as HM Treasury looks to UK savers to help underpin the vast Covid-19 spending commitments
NS&I to expand offering to savers

HM Treasury is looking to tap UK savers in the wake of the coronavirus pandemic via a substantial rise in its financing target this year. National Savings and Investments (NS&I) has raised the target, which runs through to April 2021, from £6bn to £35bn.

NS&I revealed that £14.5bn in net financing found its way to the Treasury-backed savings institution over the second quarter, taking the total to £194bn, representing a 14 per cent year-on-year increase.

NS&I savings has been drawing in the punters during the period of market turmoil, partly due to a dearth of viable low-risk options in the current interest rate environment, but also because if things go belly-up the upper limit for the Treasury-backed schemes is well in advance of the typical £85,000 Financial Services Compensation Scheme limit offered by banks and building societies.

The arrangements and scope for the NS&I offering will be assessed again in September when the cost of net financing on existing customers' deposits is compared with how much it would cost the government to raise funds through the wholesale market via equivalent gilts.

For savers, the returns on these Treasury-backed savings schemes do not compare favourably with more dynamic asset classes over the long-haul, but they do offer a viable option to park your capital if you have liquidated your positions in expectation of a fall in prices for risk assets over the coming months.