Budget announces NS&I 3-year fixed-rate Bonds and new 2024-25 Net Financing target

by | Mar 6, 2024

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Announced in today’s Spring Budget, NS&I will be releasing 3-year fixed-rate British Savings Bonds in early April. The Budget also announced the new Net Financing target for 2024-25.

NS&I has also published its unaudited quarterly results for the third quarter of the financial year 2023-24, along with a whole-year forecast.

British Savings Bonds

 
 

In today’s Spring Budget, the Chancellor of the Exchequer announced that NS&I will launch British Savings Bonds, increasing the savings opportunities available to consumers to save for the longer-term.

British Savings Bonds will be new three-year fixed-rate Issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds, which were last on sale in 2019. They will offer savers a guaranteed rate over three years for investments between £500 and £1 million. Like all savings from NS&I, money invested will be 100% secure, backed by HM Treasury, and invested back into supporting the UK.

The Bonds will go on sale in early April and the intention is to have them available for an extended period of time. The interest rates will be announced in due course and are intended to be priced mid-market in relation to similar products, in line with NS&I’s requirement to balance the interests of savers, taxpayers and the broader financial services sector.

 
 

Net Financing 2023-24

NS&I has published its unaudited results for the third quarter of the financial year 2023-24 (October-December 2023). Net Financing for the quarter was £2.8 billion, giving a year-to-date total of £12.7 billion.

Today’s Spring Budget confirms that NS&I’s whole-year Net Financing forecast for 2023-24 is £10.9 billion (excluding Green Savings Bonds). This is above the Net Financing target of £7.5 billion (+/- £3 billion), set out in the Spring Budget on 15 March 2023.

 
 

NS&I was on track to be within the Net Financing target in December. However, changing customer behaviour has meant that anticipated customer withdrawals, while still substantial, did not materialise to the extent that was expected, resulting in a higher than projected forecast.

Commenting on the news about NS&I British Savings Bonds, Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Announced today by the Chancellor within the Budget are new ‘British Savings Bonds’ through NS&I, online-only. According to the NS&I website, the expectation is these will be on sale in early April, and more details are expected to be revealed online soon. NS&I is a trusted brand and those savers who want their money safe and perhaps want to support UK businesses could well find these popular. However, the interest rate offered will need to be carefully thought out by NS&I, considering the current state of the savings market, or it could risk being overlooked. As we have seen in the past, NS&I products are popular, but savers will look elsewhere if a much higher rate can be obtained. The Chancellor said the fixed bond will have a three-year term, which may be too much commitment for some savers. Our Moneyfacts Best Buys show many short-term bonds pay more than 5%, but three-year bonds pay much less.”

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