Regulators and policymakers must turn retail investment reforms into “lasting behavioural change” says Barclays, as its latest research reveals the UK investment gap grew by 30% in two years.
The bank found 15 million UK adults now hold more than £610 billion of “possible investments” in cash, a growth of 30% between 2022 and 2024.
It called the figure a “conservative estimate” based on savers who already hold more than six months’ income in cash savings.
The growth was attributed to the rise in interest rates over the two-year period. In May 2022, interest rates were set at 1% but by May 2024 rates had risen to 5.25%. Barclays said this not only helped cash savings to grow, but made savings accounts more attractive, particularly against a backdrop of geopolitical unrest which made certain investments seem riskier.
Sasha Wiggins, CEO of Barclays Private Bank and Wealth Management, said: “Investing can deliver better financial outcomes for individuals and supports economic growth. However, the UK’s investment gap has grown by over 30% in just two years, emphasising that significant efforts are still required to transform the UK into a nation of investors.”
Barclays believes the solution will come in the form of changes to regulation and consumer support. It said some of its recommendations, made in previous reports it published on the investment gap, are set to be implemented through the Government and Financial Conduct Authority’s Advice Guidance Boundary Review.
However, it called for greater collective action across government, regulator and industry to address the investment gap and said further support measures should be considered. These include an FCA-accredited badge to help would-be investors identify entry-level investment products and the ability to compare these entry-level products in easy-to-access comparison tables.
Wiggins added: “In recent months, we have seen collaborative action and positive steps from regulators and policymakers. The task now is to turn these reforms into lasting behavioural change, helping savers feel confident, supported and better able to understand risk.
“That focus on building confidence will be central to industry’s work as part of the UK’s new retail investment campaign.”
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