London, November 18, 2025 – The Bank of England has increased the deposit guarantee for British savers to £120,000 ($158,000), up 40% from the previous £85,000 limit, the central bank announced on Tuesday. The move aims to bolster public confidence in the safety of personal savings amid persistently high inflation.

The deposit protection is administered through the Financial Services Compensation Scheme (FSCS), which compensates customers in the event of a bank or building society collapse. The previous FSCS cap had been in place since 2017. The Prudential Regulation Authority (PRA) had initially proposed a rise to £110,000 but opted for a higher threshold to better reflect current economic conditions, PRA Chief Executive Sam Woods said.

How the New Deposit Limit Compares Internationally

• The new UK deposit guarantee of £120,000 exceeds the European Union’s harmonised 100,000 euro ($115,860) limit.
• However, it remains below the U.S. Federal Deposit Insurance Corporation (FDIC) coverage, which protects up to $250,000 per depositor.

The FSCS is funded by contributions from the banking industry and serves as a critical safeguard for depositors in the event of a financial institution failure. In addition to the standard cap, the PRA announced that the limit for certain temporary high balances, such as proceeds from a home sale, will rise to £1.4 million, up from £1 million.

Implications for British Savers

The increase in deposit protection is expected to:

• Enhance depositor confidence in the UK banking system.
• Provide greater security for households with substantial savings.
• Align the UK’s deposit safety framework more closely with current economic realities, particularly high inflation.

PRA Chief Executive Sam Woods stated, “This change will help maintain the public’s confidence in the safety of their money.”

The updated FSCS limits take effect immediately and apply to all eligible deposits held in UK banks and building societies. The Bank of England emphasized that maintaining trust in the banking sector remains a central priority as part of its broader financial stability mandate.