In his Budget statement today, Philip Hammond confirmed further details of the Investment Guaranteed Growth Bond which will be available from the government’s savings arm, NS&I, and launch in April.

Here are the key points for savers:

• The three-year bond will pay a rate of 2.2%
• The minimum investment is £100, the maximum is £3,000
• It will be available for 12 months from April 2017

While the chancellor said the new product will be a “welcome break for hard-pressed savers”, the maximum interest you can earn is £66 a year or £198 in three years without taking into account any compounding of interest. With compounding, the maximum amount you’d receive is just over £202.

Maike Currie, investment director for personal investing at Fidelity International, said a rate of 2.2% over a three-year term barely covers the Office for Budget Responsibility’s (OBR’s) inflation expectations.

“While this may be a market-leading rate, anyone saving into the new investment bond will struggle to achieve a real return with OBR expectations for inflation to rise to 2.4% in 2017, 2.3% in 2018, before falling back to 2.0% in 2019.

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“To stand any chance of generating an inflation-beating return in the current environment, you’re far better off looking further up the risk spectrum, investing in bonds issued by companies rather than the government or moving into stocks and shares.”

Anna Bowes, director of independent savings advice site, SavingsChampion.co.uk, said it was disappointing the rate was not higher, given the improvements in the wider market in the time since the bonds were originally announced in the Autumn statement last year.

“The new bond will mean savers can earn up to £3,202 in interest over the three-year term, but this is just an extra £6 a year more than they could get on the open market. The current best rate on a three-year fixed rate bond available to all is 2% gross/AER with Secure Trust Bank and in fact Atom Bank actually matches NS&I, paying 2.20%, but only for those happy to apply via an app.”

Bowes said that with the positive movements in the savings market in recent months, she “wouldn’t be surprised” if more challenger banks quickly catch up and beat the rate on offer from the NS&I bond.