National Savings and Investments have cut their guarantee rate (the amount of interest paid above the Bank of England baserate) from 0.55% down to 0.30%. The lower rate will be in effect from the 6th of April.

I can’t quite work out the logic in this as the Treasury is pretty much strapped for cash and yet cutting the Direct ISA rate will undoubtedly lead to savers withdrawing their ISAs for higher yield investments.

The thing most likely to cause a change in texture of a Northern Rock shareholder’s undergarments today was the news that the UK treasury would prefer nationalisation of Northern Rock over a private deal if the decision had to be taken today.

The BBC cites a ‘banker’ who is said to be ‘close to the negotiations’ who says that the Prime Minister Gordon Brow (rather than the chancellor, Darling) is calling the shots on any potential deal. Apparently, Brown isn’t averse to the nationalisation of Norther Rock ‘at any cost’ now. He is said to feel that a partial nationalisation deal with Virgin involved may be beneficial but he wants more money in exchange for the billions (£100billion?) in support already doled out to the Rock.

You can read more in Robert Peston’s: Rock Nationalisation ‘back on’ article.

Photo Credit: Alex Gunningham cc-by-2.0