According to Andrew Griffith, the economic secretary to the Treasury, a wider share ownership is beneficial for savers, the economy, and society as a whole.
In addition to its economic benefits, increasing individual share ownership also aims to shift the culture, attitudes towards risk, and promote individual responsibility.
A think tank called the Centre for Policy Studies (CPS), which holds significant influence in Conservative circles, has proposed an advertising campaign to address the issue. The CPS has raised concerns that the estimated £1.8 trillion held by families in bank accounts is being eroded by runaway inflation. They believe a campaign similar to the successful “Tell Sid” advertisements from the 1980s, which encouraged people to invest in state-owned companies, could help increase individual share ownership.
According to the CPS report, less than 4% of household financial assets are held as listed shares in the UK. This puts the country behind its European counterparts such as France, Germany, and Spain. Even those who express interest in smart investments by opening an Isa tend to choose the cash version over a stocks and shares account.
The CPS argues that savers should be encouraged to take advantage of the wealth-generating effect of investments in equities. They warn that keeping money in cash is not a safe alternative but rather a way to see its value diminish over time. Inflation reached over 11% last year and stood at 8.7% in May. In contrast, the average interest rate on easy access savings accounts is 2.45%, while a typical one-year fixed savings product offers 4.8%.
Banks are facing pressure to offer higher interest rates to savers due to the mismatch between higher mortgage rates and savings rates set by the Bank of England.
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