The truth? Savers have been losers under this government, and Osborne knows it

Even the evening BBC bulletins are leading with this morning’s announcement by George Osborne that he will extend his ‘pensioner bonds’ programme – a glorified way of giving pre-election bungs to the over-65s. This is Osborne’s answer to Gordon Brown’s bribe, the ‘winter fuel payment’ (the word ‘fuel’ being redundant). When elections grow near, governments bribe pensioners because the pensioners are most likely to vote.

The Chancellor told Andrew Marr today (pdf) that ‘backing savers is part of our long-term plan’. The opposite is true. Screwing savers is part of his long-term economic plan: an unintentional but inevitable consequence of his screwing interest rates as low as he can for as long as possible. And it is certainly long term, he got that bit right. As the Bank of England’s chief economist recently pointed out, the market currently expects negative real interest rates for the next 40 years (see graph, below – an unusual one, but an important one).