Despite a unanimous decision by the Bank of England's Monetary Policy Committee to let the UK Base Rate rest at 5.57%, there are still suggestions that seasonal pressures on the economy may force further inflationary increases, for both on and offshore investors.

Commenting on the likelihood of this situation, the Managing Director of Abbey International, Anthony Haynes suggested that: "The danger from inflation is still there, as evidenced by the fact that other measures of inflation, such as the Retail Price Index, are still at high levels. We are probably in a situation where the unknowns are driving speculation, so we must wait for more hard data on the economy, particularly given the recent turbulence in the market which has confused both interest rate and inflation trends further still."

The situation has worsened in recent days, with public confidence in the onshore banking system suffering a serious setback due to the Northern Rock crisis. With Northern Rock's share price dropping by more than half and thousands of customers closing accounts there, the position of the Bank of England is now extremely difficult.

However, the uncertainty surrounding onshore banking could have some positive effects for offshore investors. Only last week it was reported that the Isle of Man-based Zurich Bank International had announced plans to launch Issue 4 of its One Year Fixed Rate Bond series, which offers a market leading rate of 6.60% Gross pa/AER.

Jane Matthews, Head of Marketing & Business Development at Abbey International predicted a postive outlook for the future of savers offshore, observing that: "High UK Base Rates are good news for our savings customers, particularly those in our Base Rate Tracker accounts, where rates will move upwards automatically by the full amount of any increase in UK Base Rates within two days of any change."