Online Investment Provider Comments on Spring Budget

Richard Theo, CEO at Wealthify:

High inflation

“Philip Hammond has once again failed to address the issue of high inflation eating away at Britain’s £700bn cash savings pot. A combination of record low interest rates and rising inflation is wiping approximately £8.68bn per year off the value of the UK’s cash savings.

We are in the midst of a savings crisis – according to Wealthify’s research people only have on average four weeks of their salary saved. A far cry from the three-month safety net experts recommend. The Chancellor needs to be more creative. How about building on the London Living Wage and exploring the introduction of a minimums savings wage? A salary high enough to ensure that people not only have enough to live today, but enough to secure their financial futures as well.”

Government tackling jargon

“For too long investment services have confounded people with complex jargon and hidden charges. You shouldn’t need a dictionary or a doctorate in economics to understand investing. We welcome the news that Philip Hammond intends to crackdown on misleading small print and hope the move will help to continue to break down the barriers to investing for UK savers fatigued by rock-bottom cash savings interest rates.”

Confirmation of the Lifetime ISA

“It is positive to see the Government trying to address the savings crisis with the introduction of the Lifetime ISA (LISA), but it does not go far enough.

Not only is the LISA too prescriptive by only benefitting certain age groups and those saving for a house or retirement, but the generous 25% bonus offered on cash LISAs will not look so appealing if inflation continues to outstrip interest rates. At current levels, inflation will erode the real value of a cash LISA by around 18% over ten years, significantly reducing the benefit of the bonus and any interest it accrues.

The Government needs to do more to highlight the effect that rising inflation is having on cash savings and do more to educate and encourage savers to find alternative ways to grow their money, such as via long-term investing. Only then can we truly tackle the savings crisis.”

Banks and transparency on risk

“With high inflation and rock-bottom interest rates, the purchasing power of savings held in most UK cash ISAs is rapidly declining year on year. Consumers are not told this; many people assume their money is safe in cash savings, and that it is always guaranteed to grow. But the toxic combination of historic low interest rates and rising inflation is wiping approximately £8.68bn per year off the value of their savings pots.”