The idea was to stimulate investment in domestic companies, helping to revitalise UK stocks, which have suffered from considerable outflows in recent years.. However, concerns arose that introducing another ISA would complicate the investment landscape, potentially deterring savers.
Despite the Treasury’s claim that no final decision has been made, insiders suggest the plan has been abandoned. The move contrasts with Labour’s pre-election stance, where the party indicated no intention to drop the initiative.
UK equities have struggled recently, with pension funds reducing their domestic stock exposure in favour of global equities, seeking better returns. Retail investors have also withdrawn approximately £54 billion since 2016.
While the British ISA will not advance, Chancellor Rachel Reeves is exploring ways to support UK stocks by directing more pension funds into a broader range of domestic assets. Additionally, HMRC has lifted the ban on holding fractional shares in ISAs, which could encourage more investment in UK stocks.