The British Isa is doomed to fail

Is Jeremy Hunt’s ‘British Isa’ worth having? The new £5,000 tax-free allowance for UK equity investment comes on top of the existing annual £20,000 Isa limit, so on the general principle that it makes sense to maximise tax-efficient savings, the answer might be yes. But will it achieve the Chancellor’s aim of allowing patriotic savers to buy into the growth of ‘the most promising UK businesses’ while supporting them with capital to expand? To that, I’m afraid, the answer from the professionals has been a resounding no.

UK stock-market performance has been so limp in recent years that UK-only share-buyers would have reaped barely a third of the returns earned by those who opted for global equity funds – and done worse still by comparison with US investors. Demand for British Isas is highly unlikely either to change that pattern by driving UK share values sharply upwards or to generate capital flows that might make the London Stock Exchange a more attractive home for high-growth, high-tech companies.