Britain’s investment gap undermines our economic future
The UK has a £610bn problem disguised as prudent saving. While UK households have saved £1trn in cash since 2020, nearly 15 million people are holding surplus wealth (savings above what is considered necessary for an emergency, which is classed as over six months of income) in cash, an increase of 33% in just two years.1 While cash savings are an essential part of prudent financial planning, surplus cash savings barely maintain purchasing power and individuals miss out on the opportunity to build wealth through investing.
The Financial Conduct Authority (FCA) estimates that there are around 22 million adults with £10,000 or more in cash savings who may be missing out on the benefits of investing. While individuals could be missing out on the long-term returns investing generates, British firms are missing out on vital capital needed for growth. With people living longer and pressures on public finances rising, low British investment rates have a knock-on impact on the wider economy. Low household participation in investment undermines UK competitiveness, starves companies of domestic capital and deepens inequality.
The government’s Edinburgh, Leeds and Mansion House reforms have laid important groundwork, but individual investors have not received the same strategic focus as institutional investors to date. The 2025 Financial Services Growth and Competitiveness Strategy includes the goal that by 2035, the government will help to foster a more investment-focused culture.2 This report suggests ways to drive government and industry alignment on the agenda in the coming decade.
