Trading provider IG says the UK has long prioritised a savings-first mindset, but at the same time, discourages ordinary people from investing in the stock markets.
Despite this, cash ISA subscriptions are rising while stocks and shares ISAs are falling.
IG is proposing a four-point policy framework to help “resuscitate” the UK stock market while also benefitting the public by getting more people investing.
Michael Healy, UK managing director at IG, said we’re watching a “crisis unfold” and we need “bold action”.
“We’re calling on the Government to deliver the urgent policy changes our stock market needs. For too long, policymakers have been paralysed by the desire to keep everyone happy. But the time for working groups is over – this is about getting more Brits investing, while saving a strategic national asset before it’s too late.”
Following the speculation, the Treasury confirmed in the spring statement earlier this year that the Government was launching a review of the ISA and the cash ISA market.
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Several experts told The i Paper that whilst the industry needs reform, abolishing the cash ISA is not the right approach.
Speaking to The i Paper, Ms Coles said: “Everyone should hold some cash, but not too much, and getting the balance right is always tricky.
Ms Coles, however, agrees that a cut to stamp duty on share dealing would be a big nudge of encouragement, adding it is “unreasonable” that investors buying UK shares have to pay stamp duty when most overseas share trades are tax-free.
“Similarly, targeted Government bonuses on investments could nudge behaviour more constructively than removing choice.”
“In practical terms it would also add huge complexity. Rules would be required to police the system, likely involving a ban on cash to stocks and shares ISAs transfers to prevent backdoor access to a higher allowance before moving the money to cash.”
“However, removing stamp duty for UK shares bought through ISAs would cost around £100m a year – a very low figure in Government spending terms.
The Treasury has been contacted for comment.
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