National Savings & Investments (NS&I) has dealt a blow to UK savers by withdrawing a number of its products and reducing the interest rates paid on others.

NS&I Index Linked Certificates, which have been withdrawn with immediate effect, had recently become more popular as inflation steadily climbed. They provided investors with a guaranteed return above inflation which was also tax free.

Fixed Interest Savings Certificates have also been withdrawn.

The reasons behind their sudden withdrawal are unclear, however it is possible they were becoming too popular, which would have reduced the amount of money saved in UK banks and building societies and that the target set for NS&I by the Treasury for the year had been reached early.

The rates on the Direct Saver account and Income Bonds has been reduced by 0.25%.

The news will be welcomed by banks and building societies but not by savers who will find it harder now to get a real return in excess of inflation, it also reduces the tax free savings option.