Interest rates for borrowers and savers are likely to be dragged down by further aggressive cuts to the Bank of England base rate early this year. The UK is rapidly sliding towards a zero per cent interest rate, with another base rate reduction expected next week and more early in 2009.

By the end of the year, savers might be hard-pressed to obtain a decent return on their money. Mortgages should become cheaper, at least for the most credit-worthy – but it will depend on banks’ willingness to lend.