Reduced cash ISA? Put your savings to work here instead

With a month to go before the Budget, the scuttlebutt is in full swing.

- JAMES MOORE

Among the wild rumours about what measures Rachel Reeves might announce to turn around the stagnant economy - and amid all the talk of wealth taxes, spending cuts and pension raids, she has let slip only that higher taxes for the better-off will be “part of the story” - there’s one move that has a ring of authenticity about it: reducing the amount that savers can put into tax-free cash ISAs.

A report in the Financial Times suggested that the Treasury is considering halving the £20,000-a-year Isa allowance - which, if true, would annoy millions of savers, and Martin Lewis.

Reeves’s motivations are that she wants more people to put their savings in riskier stocks and shares, to better support the UK economy, but also to encourage British companies not to hotfoot it across the Atlantic into the welcoming arms of Wall Street. This is an entirely legitimate aim.

I support the move because cash ISAs are dismal products. Most of them fail to beat inflation, which is currently 3.8 per cent and set to rise to the highest in the G7 next year, if IMF forecasts prove correct.