British Isas are a gimmick that won’t move the dial
Given the options available, Hunt’s scheme to encourage people to invest in UK firms could hardly be more modest
It was a good week to announce a British Isa, one could argue. Another two mid-sized UK companies, the haulier Wincanton and the telecoms equipment group Spirent Communications, are falling to foreign buyers, causing fresh agonising over how the unloved UK stock market has become a bargain bin for overseas predators. A British Isa, goes the theory, will incentivise UK investors to prefer UK companies over the excitements of US tech stocks or S&P 500 tracker funds.
Here’s the problem. The chancellor’s design for a British Isa could hardly be more modest. He has created a £5,000 allowance, with the same Isa tax advantages, to be invested in purely UK assets (precise definition to follow after a consultation). That’s on top of the existing £20,000 maximum, where investors are free to roam the globe. Crunch the numbers on the likely takeup of the extra £5,000, however, and the sums amount to “a rounding error,” as investment platform AJ Bell put it.
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