The Budget did nothing to "rejuvenate" a stagnant savings market and young people needed more to help boost their investments.
This is the view of Myron Jobson, personal finance campaigner for Interactive Investor, who said some of the decisions outlined by chancellor Rishi Sunak in the recent March Budget seemed "odd", especially if the government aims to get more younger people saving more.
FTAdviser In Focus caught up with Jobson to get his views on the Budget, on tax incentives and what younger people need from HM Treasury to help them become better savers.
FTAdviser: Did Interactive Investor notice any savings spikes immediately pre/post Budget?
Myron Jobson: Not particularly. Our customers tend to hold money in cash as part of their wider investment strategy. It might be the case that an investor is biding their time waiting for a buying opportunity.
It’s very difficult to draw quick conclusions, especially during the final weeks of the Isa season, when many people become more active with their portfolios.
While we can’t generalise about our customers, they tend to be buy and hold investors, focusing on long-term, ‘get rich slow’ wealth creation – but there will always be active and enthusiastic traders.
FTA: Do you think the tax measures outlined by Sunak will have a noticeable impact on savers?
MJ: The Budget did nothing to rejuvenate the savings market which has stagnated in the persisting low interest rate environment.
In fact, if the reduction in the National Savings & Investments financing target is anything to go by, the next financial year could spell more misery for saving rates.
The biggest news for savers was the launch of a ‘green’ retail savings product which will be closely linked to the UK’s sovereign green bond framework through the NS&I this summer. The burning question is what level yield will be offered at a time of rock-bottom savings rates?
‘Cause-based’ savings products are few and far between, and more competition in this area is welcome. But an education campaign may be in order here to help understanding.
FTA: What could the freeze on personal allowances and the reinstatement of the Lifetime Isa penalty mean for younger savers in particular?
MJ: The chancellor decided to keep the Isa and personal savings allowances at their current rates of £20,000 and £1,000, respectively.
While savings accounts have swelled over the past year owing to lockdown savings on the cost of commuting, entertainment and holidays, the freezing of these personal allowances are likely to have no impact on the majority of young savers.
Those who are in a fortunate position to max out the Isa allowance still have a savings allowance of £1,000 before gains become subject to tax.