UK Budget: Reeves to Cut Annual Cash ISA Limit to £12,000 - video Dailymotion

Watch UK Budget: Reeves to Cut Annual Cash ISA Limit to £12,000 - Bloomberg on Dailymotion

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00:00What do these ISA changes mean, Anna? We assume that the total cap is still 20,000,

00:05it's just that the cash component is 12,000, so you're compelled to put the extra 8,000 into equities,

00:09but not necessarily UK equities. Is that correct understanding?

00:13Yeah, I think those are the broad contours of it. I think from a public finance perspective,

00:18this is part of sort of a broader move of Reeves to sort of try to raise revenue anywhere she can

00:23outside, you know, the biggest four tax streams. So this includes income, corporate tax, NICS and VAT.

00:30So she's clearly trying to do her best efforts to sort of keep the manifesto, Labour's manifesto.

00:35I think I would say there's like two problems with these sort of moves and, you know, going a bit

00:39after savings, a bit after pensions, is that the tax base is much narrower. So she actually needs to do

00:45bigger policy changes to yield any sort of significant revenue, and that will only yield

00:50a few billion. And then there's a lot of uncertainty about the sort of the revenues it will generate

00:54because people might just stop saving into cash, as you said. And so then, you know, there's not that

00:59much revenue that will sort of come from that. So in a way, you know, it's a bit of a risky move,

01:05I would say, to sort of rely on these sort of like going after savings pensions to sort of fill a hole

01:10that's as big as 30 billion. Does that keep the bond vigilantes on their toes then? How much of a risk

01:14are the bond vigilantes tomorrow? I definitely think the composition will be the composition of the

01:19savings of how she fills the hole of how she gets to sort of this 30 billion, if that's the right

01:23amount, will be something that the bond vigilantes will care about. I mean, the income tax has been ruled

01:28out. And the risk that she relies on this sort of small measures, it means that, you know, I mean, I

01:33think it means uncertainty about the exact revenues she will get. But I also think the other thing that the

01:38bond vigilantes will be looking at is the profile. So if she does the fiscal tightening sort of in the next few

01:43years, that means, you know, that the revenues will start to come in quite soon. But if she back loads the fiscal

01:48tightening, you know, I think investors will start questioning are they going to follow through those

01:53changes because 2029 is an election year. So, you know, they might discount a bit of that as well.