Inflation hammering value of cash savings worth more than £2 trillion

  • Britons like to save – but too many of us are saving in cash, despite the more attractive returns which might be available through investing in shares
  • There is £1.8 trillion of cash in savings accounts – roughly equivalent to the entire market capitalisation of the FTSE 100 – and approximately £300m in National Savings and Investments accounts. The value of those savings is currently being hammered by inflation
  • The UK is behind other nations in terms of retail investing. Retail investors control just 21% of UK assets under management, the lowest percentage in Europe. The percentage of UK equities owned by UK residents has been falling consistently for decades
  • Far more people take out Cash ISAs than Stocks and Shares ISAs, especially those on lower incomes – exacerbating wealth divisions in the UK
  • A major new report for the Centre for Policy Studies, endorsed by City Minister Andrew Griffith MP, calls for a new Retail Investment Strategy and a range of measures, akin to the ‘Tell Sid’ campaign of the 1980s, to move savings from cash into shares

The UK’s overly cautious attitude to risk and high regulatory barriers to investing are putting millions of people off becoming shareholders, according to a new report from the Centre for Policy Studies. This means those who save in cash are seeing its value eroded thanks to inflation, falling ever further behind the more-affluent and better-advised.

‘Retail Therapy’, written by CPS Research Fellow and former Government adviser Nick King and endorsed by City Minister Andrew Griffith MP, calls for a revolution in share ownership. It highlights the fact that there are 9.7 million people with investable assets of more than £10,000 held in cash, of whom more than four million want to take at least some form of investment risk. Yet at the moment, buying shares is treated by the regulators as a more dangerous pursuit than gambling – and high street banks are discouraged even from suggesting that their customers might benefit from moving their savings into shares, or offering easy ways to do this.

Successive governments have done far too little to address this, even ignoring opportunities like the selling off of the national stake in NatWest, which could have created a whole new generation of UK shareholders, but which were instead sold off to institutional investors.

This is just one example of a wider shift within the UK to prioritise institutional investors. As a result, retail investors have the lowest percentage of assets under management of any European nation – 21% compared to 28% in France, 30% in Germany, 34% in Italy and 84% in Spain. The UK also has a far lower percentage of household financial assets in listed shares. Small wonder given that the percentage of UK equities owned by UK residents has fallen consistently in the last three decades and now stands at 12% compared to more than 50% in the 1960s.

Under normal circumstances, this neglect of the stock market would be bad for the UK, its citizens and its growth prospects. But in the current inflationary environment, the huge amount of savings left in cash is positively disastrous.

Even among savers, there were eight million Cash ISAs taken out in 2020/1 compared to just 3.5 million Stocks and Shares ISAs. In just April 2023, £11 billion more was invested into Cash ISAs. Taken together, Cash ISAs now hold almost £300 billion in savings.

The paper, supported by PIMFA, argues that changes to red tape, an improved attitude to risk, and increased public awareness of the wealth-creating opportunities of investing, could help the UK unlock capital and boost its appeal to businesses. As Rishi Sunak wrote in ‘A New Era for Retail Bonds’, his 2017 report for the CPS, the failure of Britons to invest in the stock market represents ‘a vast store of underworked capital’.

The report therefore calls for politicians to once again consider individual share ownership to be a political priority, alongside home ownership, as was the case in the 1980s. In particular, it recommends:

  • A new Retail Investment Strategy with the explicit aim of creating more retail investors, putting them on an equal footing with institutional investors
  • A public awareness campaign along the lines of the 1980s ‘Tell Sid’ campaign, supported by the government, regulators, and the London Stock Exchange
  • Ensuring the odds aren’t unfairly stacked against retail investors. A proportion of new equity offered through IPOs should always be available to retail investors
  • Rethinking disclaimers around retail investing to take a more realistic, positive attitude towards risk, with personal responsibility in investing embraced
  • Merging Cash ISAs and Stocks and Shares ISAs into a single product. Savers could maintain savings in cash but would be made more aware of the potential long-run returns of stocks and shares

Nick King, CPS Research Fellow and author of ‘Retail Therapy’, said:

‘It is received wisdom that owning your own home is a good thing – it gives you a stake in society and is in many ways the foundation of the UK’s property-owning democracy. Sadly the same cannot be said for share ownership.

‘Whether they are put off by high regulatory barriers, a lack of access to advice or a greater understanding of the opportunities which exist, the British public are missing out on the rewards that can come with individual investing. If our recommendations are taken on board, the UK can unlock billions in new investment – supporting a dynamic economy which will create the jobs, opportunities, and wealth of the future.’

Andrew Griffith MP, Economic Secretary to the Treasury, said:

‘Wider share ownership is good for savers, good for the economy and good for society.

‘Outside of the EU, we have the opportunity to knock down regulatory barriers to help individuals make their money work harder for them and to make it easier for entrepreneurs and businesses to raise investment in the UK.

‘However, increasing individual share ownership is also about changing culture, attitudes to risk and supporting individual responsibility.

‘That’s why I welcome this timely report by the respected Centre for Policy Studies, produced with support from PIMFA.’

Liz Field, Chief Executive of the Personal Investment Management and Financial Advice Association (PIMFA), said:

‘PIMFA is committed to building a culture of saving and investment in the UK. This need to open up opportunities and create the right environment for retail investors is clearly evidenced by over 9 million people today who have investable assets of over £10,000, mostly or entirely in cash.

‘I congratulate CPS on this timely report and recommendations, which outlines how targeted and ambitious government policy can level the playing field for both retail and institutional investors and create the right conditions to help people build their wealth and invest in the growth of the UK.

‘Whilst not covered in the report, although implicit in the recommendation for a broader retail investment review, is that a focus for the government going forward should be to also look at whether or not the savings and investment incentives we have in the UK remain fit for purpose.’



  • ‘Retail Therapy’ is available to download here.
  • ‘Retail Therapy’ will be launched during the afternoon of Wednesday 5 July with a speech from Andrew Griffith MP, Economic Secretary to the Treasury. Media spaces are available, to attend please email [email protected].
  • Nick King is a Research Fellow at the Centre for Policy Studies.
  • ‘Retail Therapy’ was supported by the Personal Investment Management and Financial Advice Association.
  • For further information, please contact Emma Revell on 07931 698246 or [email protected] or Josh Coupland on [email protected] and 07912 485655.
  • The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, business, welfare, education, housing and green growth, its goal is to develop policies that widen enterprise, ownership and opportunity.



Date Added: Wednesday 5th July 2023