ISA & pension reform: Why forced investment is not real investment

The UK's capital markets are not working. People's savings are not being effectively channelled into productive, long-term businesses. This is reflected in declining IPOs, a shrinking number of listed companies, and difficulties faced by innovative firms seeking growth capital.

This article argues that there are two distinct but related problems behind the UK's investment challenges. First, the financial system has structural flaws—such as a fragmented pension sector, a collapse in equity research, and high transaction costs—that hinder efficient investment. Second, and more fundamentally, the UK's high-cost business environment makes many companies uncompetitive and therefore unattractive to investors. Forced investment through ISAs or pension mandates would not address these root causes and risks harming savers by concentrating risk.

The real solution is to address both the mechanics of the financial market and, above all, to lower business costs and improve the fundamental competitiveness of UK firms. Only by tackling these barriers can we create real investment opportunities and improve outcomes for both savers and the economy.

Read the full article on Centre for British Progress for detailed analysis, recommendations, and supporting data.