Bank of England  

Cash outlook still poor despite rate rise

On the rate hikes, Tom Stevenson, investment director for personal investing at Fidelity International, said he expected this to be the only rate hike that the Bank of England makes this year and possibly well into next year.

This means the base rate is unlikely to overtake even subdued inflation anytime soon, and the average cash savings account is therefore unlikely to offer real returns for the foreseeable future, he predicted.

He added: "Even if you are able to find one of the few cash accounts out there that offer inflation beating interest rates, they often only last for 12 months and come with a number of restrictions. 

"Over the medium- long term, keeping large sums in cash is almost a sure fire way to erode the value of your savings - with this in mind and with inflation likely to outpace interest rates for some time to come, the stock market continues to be your best bet for generating inflation-beating returns."

Mr Stevenson said while investing in stocks and shares may be more risky than keeping your money in cash, history showed that, over the long run, equities have significantly outperformed cash and continue to be the sensible choice for anyone looking for long-term real returns.