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Monthly Savings Tracker (June 2024) – the Great British Savings Squeeze

17th Jun 2024
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Allica is a bank built especially for established businesses with between 5 and 250 employees...
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Monthly Savings Tracker June 2024
Allica Bank
Allica Bank’s regular Monthly Savings Tracker for June has revealed that the average business savings rate available from the Big Six banks has reduced this month. The drop to 1.45% a year follows eight months of it sitting stagnant at 1.59%. 

The tracker – which averages out the instant access savings rates made available to SMEs from the Big Six banks – exposes the stark contrast to the challenger banks, which are offering rates up to 4.33% a year on the same cash. 

It means SMEs can access a rate up to 2.88% higher by switching their savings to a challenger bank. For an average SME with £75,000 of savings, that could mean an extra £2,157 in return. While for those more established SMEs that have larger amounts of surplus cash on the balance sheet, the opportunity is even larger. 

For example, a business with £500,000 in savings could earn an extra £14,380 a year just for switching. While a business with £1 million in savings would earn a total return of £43,300 – that’s an additional £28,760 compared to what they would be earning in a high-street bank account.  

Just think what your clients could do with an extra £28,000! 

Billions of missing SME savings interest 

Allica’s Monthly Savings Tracker is part of its Great British Savings Squeeze campaign and petition. Launched in partnership with the Federation of Small Businesses and the Institute of Directors, it is aiming to raise awareness among SMEs of this missed opportunity and call on government and regulators to help businesses get the returns their hard work deserves. 

Research it undertook last year revealed a significant gap between the rates SMEs are offered by challenger banks and the larger, incumbent banks . Overall, it showed that SMEs are due more than £7.5 billion in ‘missing’ savings interest per year, with big banks offering much lower interest rates to smaller firms compared to large companies, and in many cases offering smaller firms no interest at all on their savings. 

This growing discrepancy in the rates offered is occurring despite the Bank of England Base Rate remaining steady at 5.25% for almost a year.   

Richard Davies, CEO of Allica Bank, said: “Every month our tracker continues to show that British SMEs are being ripped off when it comes to their business savings. We hope that by bringing attention to this issue we can start to change things for the better and help business owners across the UK to make the most of their savings. 

“There are more than five million SMEs in the UK who bring huge value to the UK economy and our communities. It’s time they were given the banking they deserve.” 

Rashesh Joshi, Co-Founder and Managing Director at Alexander Rosse Chartered Accountants said: "As accountants and tax advisors, we pride ourselves on helping our fast growth entrepreneurial SME clients make informed decisions, enabling them to run successful businesses, this includes helping them assess the financial products and services they use.  As close and trusted advisors, we have a unique position to add value to our clients' businesses and unlock financial opportunities for them, simply by helping them shop around for more competitive interest rates. 

"Looking at business banking might seem lower down the priority list, compared to filing tax returns and meeting HMRC deadlines, but, as this latest data from Allica Bank demonstrates, it could be worth a huge amount not just to individual SMEs but also to UK PLC." 

After a decade of rock-bottom interest rates, saving is finally interesting again. Whether it’s an extra £2,000 or £20,000, having a conversation with your clients about earning this extra cash and what they can do with it is meaningful to your client relationships and can support your business advisory discussions.  

If you’d like to talk to one of Allica’s dedicated accountancy partnerships team about how your clients can get more from their savings, reach out to our team at  allica.bank/accountants.