NS&I's new 2pc interest account

National Savings and Investments have launched a new savings account paying interest of 2 per cent.

People can invest between 1 and 2m in the Direct Saver account, which can be managed online or by telephone.

The Government-backed group said it had set the variable interest rate at 2 per cent to ensure it delivered a fair return for savers, but maintained a "stable competitive position".

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The rate puts the account in eighth place on the best buy tables for internet accounts.

But while it is not a market leader, its launch is still likely to anger many building societies, who have complained they face unfair competition in the savings market from NS&I and the nationalised and part-nationalised banks.

The group already has a Direct ISA which can only be managed online or through the internet.

Many of its other savings accounts can also be managed through the Post Office and by post.