Nowhere is the chasm between official statements and the real world wider than on the subject of interest rates.

The media never tire of telling how low interest rates are.

Really?

Official base rates may indeed be low, and, taking their cue from that, the banks are paying their depositors rates of interest that make one wonder why anyone should bother putting money in a bank.

However, to suggest to most borrowers that interest rates are low would be laughable if it were not positively insulting.

Entrepreneurs should not be misled by the media but should check their statements. The interest rate on many overdrafts and credit cards is now the same as that charged in the era of higher-inflation, and seems to have been creeping up even as official rates are going down.

Those who agreed fixed rate loans in happier times are still better off, despite the decrease in base rates. So few new loans are being approved that the banks feel that they can charge what they like on them.

It is basically the law of supply and demand: whatever the official rate might be, it cannot alter the fact that ready cash is in short supply and anyone who happens to have some can therefore command a high premium to lend it out.