Government must increase financial education in order to boost investment, think tank warns
The government must do more to encourage wealth building and increase financial knowledge as Brits continue to turn away from retail investing, a think tank has warned.
According to the latest report from the Startup Coalition, only 50 per cent of adults invest in the stock market, leaving billions in low-yield accounts and cash ISAs, with women, people outside the South East and those on lower annual incomes less likely to invest than others.
This evidence suggests that nearly £400bn of household savings across the UK have been eroded by inflation, due to increasing rates steadily diminishing the purchasing power of money.
Chancellor Rachel Reeves has been encouraging Brits to invest in the stock market over the past several months, including through plans to roll out a targeted advice scheme to urge Brits to invest.
The Treasury is seeking to fast-track the plans and launch the scheme by the 2026 ISA season.
There are also growing rumours the Treasury is considering slashing stamp duty on UK stocks to 0.5 per cent for newly listed firms, as well as debating an overhaul of the ISA regime, including through halving the tax-free ceiling on cash ISAs from £20,000 to £10,000 to stop people from hoarding cash.
Financial advice gap
However, despite the Chancellor’s plans to revitalise the stock market and boost economic growth, the financial advice gap persists, with just 9 per cent of people receiving regulated financial advice last year.
Brits, in particular young people, have been repeatedly calling for better access to advice, hailing traditional models as inaccessible, overly complex and expensive.
This has led many to using unregulated sources, including ‘finfluencers’ and AI chatbots, despite their inability to provide tailored advice, with under 35s most likely to use these resources due to their hunger to invest and grow their wealth.
Meanwhile, one in five did not access advice from any source, while nearly half of people said they knew “little or nothing” about investing.
Break down barriers
The Startup Coalition is now urging the government to remove the barriers blocking the majority of people from investing in order to maximise the country’s wealth-building and economic growth.
This includes the introduction of financial education in schools, with a particular focus on the junior ISA, while also calling for fresh rules to help investors connect their financial data between accounts.
Charlie Mercer, policy director at Startup Coalition, said: “Growth only matters if people across the UK feel it.
“Too few people in the UK understand how to make the most of their money, and even fewer are empowered to then take action.
“Breaking down barriers to wealth-building isn’t just smart economics, it’s a social imperative.”