Incentivising UK investors – Budget 2024

By Fiona Morrison from Francis Clark Financial Planning.

Is buying British best? In Jeremy Hunt’s speech for the UK Spring Budget today, he set out ways of incentivising UK investors investing and saving in the UK. However, this is all light on detail at this stage.

You could own shares in NatWest

• “We will proceed with a retail sale for part of the Government’s remaining NatWest shares this summer at the earliest opportunity, subject to supportive market conditions and value for money”
• Higher risk investors may be interested, but as we know single company shares are volatile as therefore not for funds where you have a reliance on the capital

A new British savings bond

• A national savings and investment bond focussed on British investment with a guaranteed interest rate in return for committing your capital for three years
• This could be a useful home for saving for financial projects coming up in three or four years’ time as variable interest rates will drop as inflation continues to reduce
• The cash savings are backed by HM Treasury, therefore the depositors compensation limit of £85,000 is not a consideration

A UK ISA

• Jeremy Hunt announced, “today following calls from over 200 representatives of the city and our high growth sectors I will reform the ISA system to encourage more people to invest in UK assets”
• Today simply announces a further £5,000 subscription allowance for funds invested in UK companies which have the same tax benefits as current ISAs
• The additional £5,000 to invest in tax free savings is welcome. However, when this may appear and what it may include asset-wise seems very unclear. The consultation ends on 6th June 2024, and we await more detail

Mashud Rahman, head of investments at Francis Clark Financial Planning, says: “Over the past few years, we have shifted across to a view that prefers a more global approach, using a smaller allocation towards the UK in light of weaker growth forecasts and continuing political uncertainty, not forgetting the impact of Brexit still looming. The introduction of an UK ISA to encourage growth in the UK is great, however it remains important for investors to remember that a globally diversified portfolio will be better positioned to provide sustainable long term returns midst the changing macroeconomic environment.”

So, is British best?

I think a diversified approach to investing is the best way to achieve long term performance, but the UK does and always will play a part in this.

If you have questions about what this may mean for your investments, please speak with your financial adviser who will be happy to help.

Read more analysis in our Spring Budget 2024 hub.