British ISA to Boost UK Markets – Budget Latest

The
UK
ISA,
as
the
chancellor
called
it,
will
be
a
new
tax-free
product
to
invest
in
UK-focused
assets
to
support
savers
and
open
up
UK
retail
investment
opportunities
for
individuals.

The
Treasury’s
“red
book”
states:
“Following
the
ambitious
Edinburgh
and
Mansion
House
reforms,
the
government
will
go
further
to
improve
the
competitiveness
of
the
UK’s
capital
markets
and
unlock
more
private
capital
for
the
UK’s
growth
industries,
including
through
launching
a
UK
ISA
to
support
savers
and
open
up
new
investment
opportunities
for
individuals.”

The
Edinburgh
and
Mansion
House
reforms
are
both
government
initiatives
to
boost
the
attractiveness
of
investing
in
the
UK,
and
encourage
a
saving
culture.
UK
equities
have
struggled
to
maintain
their
popularity
in
recent
years,
with
UK
companies
like
Arm
Holdings
choosing
to
list
in
New
York,
and
other
London
listed
shares
moving
elsewhere.
The
success
of
US
stocks
like
Nvidia
and
Tesla
have
also
turned
UK
investors’
attention
across
the
Atlantic.

Hunt
also
announced
the
launch
of
“British
Savings
Bonds”,
delivered
through
National
Savings
and
Investments
and
due
to
launch
next
month,
in
April
2024.
This
product
will
offer
a
guaranteed
interest
rate,
fixed
for
three
years.

He
says
the
government
“welcomes
recent
market-led
initiatives
that
open
up
new
access
routes
to
government
financing
for
retail
investors
and
will
continue
to
examine
ways
in
which
it
can
support
retail
customers’
investment
in
gilts.”

British
ISA
Receives
Mixed
Reactions

This
“Great
British
ISA”
has
been
mooted
for
months
prior
to
today’s
set
of
fiscal
announcements,
and
been
the
subject
of
mixed
opinions
from
policy
commentators
and
financial
experts
alike.

“In
theory,
that
could
provide
a
tailwind
for
UK
equities
if
a
significant
number
of
investors
invest
extra
money
in
UK
stocks,
pushing
up
prices,”
says
Russ
Mould,
investment
director
at
AJ
Bell.

“In
reality,
people
can
already
invest
as
much
as
they
like
in
UK
shares
via
a
stocks
and
shares
ISA,
so
any
benefit
for
UK
companies
is
likely
to
be
relatively
marginal.

“Even
if
every
single
stocks
and
shares
ISA
holder
using
their
maximum
allowance
went
out
and
bought
£5,000
of
UK
shares,
that
amounts
to
just
0.2%
of
the
UK
market’s
aggregate
value.
In
reality,
most
will
just
re-allocate
money
in
their
main
ISA
anyway
in
order
to
keep
their
overall
UK
exposure
roughly
the
same.”

Richard
Parkin,
head
of
retirement
at
BNY
Mellon
Investment
Management,
adds
that
only
15%
of
ISA
investors
actually
utilise
the
full
£20,000
allowance:
“We
[…]
need
to
make
sure
the
qualification
rules
actually
drive
additional
UK
investment.
If
not
set
up
correctly
we
could
just
see
existing
UK
equity
investment
used
to
access
the
higher
allowance.”

Meanwhile,
Natalie
Bell,
fund
manager
within
the
Liontrust
Economic
Advantage
team,
comments
that
while
the
ISA
will
be
an
important
catalyst
to
help
reverse
the
trend
of
persistent
outflows,
it
needs
to
be
followed
by
further
action.

“We
hope
that
this
will
be
supplemented
in
due
course
by
other
important
changes,
such
as
encouraging
more
domestic
investment
by
pension
funds
and
reviewing
the
significant
‘red
tape’
that
comes
with
being
listed
to
remove
anything
unnecessarily
burdensome.
Such
initiatives
would
go
a
long
way
towards
levelling
the
playing
field
for
the
UK
as
a
primary
stock
market
listing
venue
on
the
world
stage.”

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