Your MoneyStocktake

Hunt’s UK ISA won’t solve FTSE’s problems

A quarter of the average British portfolio is already allocated to the UK even though it accounts for only 4% of global market capitalisation

Chancellor of the exchequer Jeremy Hunt delivering his budget to the House of Commons last week. Photograph: House of Commons/UK Parliament/PA Wire

Proinsias O'Mahony's face
Proinsias O'Mahony
Mon Mar 11 2024 - 05:30

UK chancellor Jeremy Hunt last week announced a tax-free UK ISA (individual savings account) in an effort to boost investment in British assets and revitalise confidence in London’s ailing financial markets.

Hunt was under pressure to do something. UK shares have underperformed for years and the London market has suffered a number of high-profile departures.

However, the new ISA didn’t impress tax campaigner Dan Neidle. He notes that FTSE 100 companies such as Antofagasta and Airtel Africa, which don’t operate in the UK, can presumably go into a UK ISA while major British employers such as Google and Citigroup can’t. Indeed, most FTSE 100 companies are international firms that get most of their earnings from outside the UK.

There is also the problem of home bias. A quarter of the average British portfolio is already allocated to the UK, even though it accounts for only 4 per cent of global market capitalisation. Critics also questioned Hunt’s refusal to abolish stamp duty on UK shares.

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Overall, it’s hard to disagree with Neidle’s assessment that the UK ISA is “a sticking plaster that won’t fix the FTSE’s problems”.

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