The Lemon Fool

I notice that in NS&I adverts they state that *all* money invested (no £85,000 limit) is safe because it's backed by the government. Is this guarantee backed up legally in any way or is it just a government promise?

lennich wrote:I notice that in NS&I adverts they state that *all* money invested (no £85,000 limit) is safe because it's backed by the government. Is this guarantee backed up legally in any way or is it just a government promise?

Government-backed NS&I holds only a bit more than £100 billion invested by UK savers. Although technically it's not a legal guarantee, the amount is so small in the great scheme of overall government debt, the cost could be created by QE if really needed and gilt issues were not possible because of lack of confidence from investors.

Afaics anything that is "Legal" just amounts to a government promise to enforce the rules. So what is the difference?

They can change the rules whenever it suits them, and have done so in the past.

Gryff

OK, thanks guys for taking the trouble to reply.

I mentioned 'legal' because that would raise the possibility of court action against the government i.e.some sort of recourse to them saying "times are tough, you can't have your money right now" or some such. And, of course, the courts have ruled against the gov in the past.

I shall go away and do a bit of hand-wringing.

Cheers,
Len

I think you're worried about the wrong thing.

The Westminster government has NEVER defaulted on a debt in 700 years.
Since we came off the gold standard in 1931, it is even less likely to happen, as they can easily print more money to repay your debt.

What matters, is what inflation has done to your money. You WILL get it back. But when you get it back it might be worth a fraction of what it was worth when you invested it.

Gryff