The Courier & Advertiser (Perth and Perthshire Edition)
Letters to the editor
Are low interest rates a signal to spend?
Sir - Interest rates are awfully low and no-one is really sure why.
The Government’s interest cost has fallen by more than a fifth to just one half of one per cent, reflecting a drop in interest rates all around the world.
Together, these worldwide falls in interest rates make it cheaper than ever for us to borrow.
Could these low rates reflect some policy decisions by the biggest borrowers and savers in the world?
The USA is by far the biggest borrower and the world’s biggest savers are the Chinese.
Or maybe the glut of global savings is driving down our interest rates? This is good news for some of us but not for savers.
Of course, because it’s governments who are the biggest borrowers and are benefiting from such low rates, we can be sure that savers are suffering from this bonanza for taxpayers.
Could it be that low interest rates are a signal to all of us that spending is better value than saving?
The price of oil is also affecting countries all around the world.
This is reflected in a change in policy by Saudi Arabia, the world’s biggest oil producer, which is in a price war with its rival Iran.
We also have the reemergence of the USA as the largest source of oil and gas in the world.
Those energy price gyrations are linked to the market values of shares in oil companies that have also gone up and down.
Those fallen share prices have some effect on the values of our pension funds and they have upset the governments of several other countries where they depend on the tax income from their oil exports.
Low oil and gas prices are good news for households and drivers in Scotland, but tough on governments that rely heavily on tax revenues from them. Holyrood, please note.
So that’s where we are. What’s good news for borrowers is also bad news for savers and bad news for governments relying on oilfield taxes.
This is beyond the control of anyone in Scotland or anywhere else.