James Blower, of the Savings Guru, said: “Although NS&I are allowed to operate in quite a large range of plus or minus £4bn, they are off track on hitting £12bn so will need to increase rates somewhere to get within range.”
Premium bonds ‘may hold steady’
Mr Blower said NS&I might hold off on reducing the Premium Bond prize rate, ahead of a predicted cut to the Bank Rate – currently 4pc – in December.
He said: “I suspect that the recent increases to fixed rates were designed to help deal with this but with Premium Bonds accounting for around 58pc of their book, it feels like they may have to do something here too.”
Mark Hicks, head of Active Savings, at Hargreaves Lansdown, said: “The Premium Bond prize rate may hold steady, despite rate cuts in the wider savings market, to help NS&I hit its fundraising target for the year.
“However, there are no guarantees Premium Bond rates will hold out. We will need to wait and see whether the need for fundraising trumps this in the coming months.”
Before the Budget, Ms Reeves was urged by top economists to scrap the £50,000 Premium Bond limit in order to encourage more savers into the lottery. But the Chancellor did not make this change on Wednesday.
It comes after a National Audit Office report found that NS&I’s digital transformation project had cost an additional £1.3bn. It will not be delivered until March 2028, four years behind schedule, the report said, after the savings provider set itself “an overly ambitious timetable”.
An NS&I spokesman said: “We review the interest rates on all of our products regularly to ensure that we continue to balance the interests of savers, taxpayers and the broader financial services sector.”
