There is a silver lining to the budget: Savings rates will remain higher

Savers are likely to be the big winners in Wednesday’s autumn budget.

The barrage of huge tax hikes and spending increases will certainly hit household finances, but the good news is that it should keep savings rates high for longer.

As a result, inflation is expected to remain slightly above the Bank of England’s 2 percent target for the foreseeable future. That means the Bank will take a more cautious approach to cutting interest rates than previously expected.

Ahead of the Budget, financial markets widely expected the central bank to cut the base rate from 5 per cent to 3.75 per cent by the end of next year.

Two cuts had been planned for the end of this year, the first of which would occur next Thursday, to 4.75 percent.

But the Bank’s rate-setters are now expected to remain impassive for even longer. Forecasters predict rates will hit 4 percent by the end of next year, with only one cut before 2025.

That’s bad news for borrowers, but good news for savers.

Some banks and building societies have already raised their rates since Wednesday. Trading 212 increased its rate from 5.1 percent to 5.15 percent, while

Moneybox’s offers increased from 4.75 percent to 5.15 percent for new customers, including a 0.45 percentage point bonus for one year.

Paragon Bank launched a new account with the highest payouts last month. The online account pays 4.87 percent but limits you to making two withdrawals a year.

However, some banks that have had a wall of money flowing in have cut their rates. For savers, the advantage of cash Isas over ordinary accounts is that all their interest is tax-free.

With rates swinging all over the place, one thing is clear: check your Easy Access Isa to make sure you’re getting a decent, competitive rate. If not (some pay lousy rates of less than 2 percent), transfer your money to a better one.

Don’t transfer it yourself by redeeming it, as you could lose the tax relief on your money. Instead, find a new provider and ask them to arrange the transfer for you; It should not take more than 15 business days.

Fixed rate cash Isa offers have also been swinging up and down in recent days. Providers change the rates on these accounts according to the amount of money they want to deposit, rather than reflecting the Bank of England’s base rate.

This week, Aldermore withdrew its top-paying 4.5 per cent cash Isa for new savers, while Charter Savings Bank and Zopa cut their rates to avoid being at the top of the best buys tables.

However, Shawbrook Bank, keen to attract your money, introduced a new one-year fixed rate Isa at 4.5 per cent.

Two-year rates pay a little less, but you can still earn more than 4.25 percent. Cynergy Bank raised its rate to a high of 4.3 per cent yesterday, just hours after Hodge Bank’s increase to 4.27 per cent.

The moves followed Shawbrook Bank raising its rate from a lowly 3.78 per cent to a high of 4.27 per cent earlier this week.

The advantage of fixed rate accounts is that you know exactly how much interest you will earn over the term. On easy-access accounts, you’ll likely see your rate drop if the base rate drops next week.

Make sure you’re happy to tie up your money. With a fixed rate Isa you can contract it during the term, but you pay a commission for doing so.

If you have used your £20,000 cash Isa allowance this year, you will have to opt for an ordinary account and could end up paying tax.

Basic rate taxpayers can earn up to £1,000 in interest before having to start paying tax, while higher rate taxpayers can earn £500. People who receive an additional rate do not have any subsidy.

The highest access rates come from Chetwood Bank at 4.86 percent, followed by Ford Money at 4.75 percent, where you can deposit and withdraw money as you wish and still get these top rates.

Atom’s new Instant Saver reward pays 4.85 per cent, but the rate drops in any month you make a withdrawal, to the equivalent of 3.25 per cent.

Coventry BS pays 4.83 per cent into your Triple Access Saver (online) account and restricts you to three free withdrawals a year.

For one-year fixed rate bonds, the top rate of 4.8 per cent comes from Union Bank of India, with the best two-year rate being 4.6 per cent from Atom Bank. You cannot withdraw your money from these accounts during the term.