British Isa gives investors a cheap shares opportunity, says ALEX BRUMMER

The second cut in employee National Insurance payments in four months will boost the income of the average worker by £1,500 over the next financial year.

This may not fully compensate for the freeze on tax allowances until 2028-29 but it does put extra cash back into the pockets of working households and ought to be an incentive to work, spend and save rather than collect benefits.

Those with surplus income also will have an opportunity to back Britain. 

One of the great failings of recent times is the way which pension funds and asset managers have deserted the UK, leaving listed companies vulnerable to lowly-priced overseas and private equity takeovers.

At the time of writing, there are several UK firms under siege, such as the innovative insurer Direct Line, logistics pioneer Wincanton and advanced telecoms provider Spirent.

Takeover frenzy: One of the great failings of recent times is the way which pension funds and asset managers have deserted the UK, leaving listed companies vulnerable to predators

The Chancellor, Jeremy Hunt, is taking two specific measures to try to correct a wrong which has denuded the UK of control over its own research and development (R&D), intellectual property, key personnel and corporation tax revenues. Of most interest to savers will be the British individual savings account.

In spite of rampant inflation, the ISA allowance for tax-efficient saving has been frozen at £20,000 for more than seven years. 

The new British ISA will allow savers to tuck away a further £5,000 a year so long as they choose UK-listed companies.

Precisely which firms will qualify and whether there will be any opportunity to invest in UK start-ups is not yet clear

However, with so much of the FTSE 350 undervalued when measured against New York comparators, there should be plenty of promising opportunities for investment in growing enterprises.

Hunt is also counting on the power of transparency and taking a leaf out of the book of the Aussie superannuation funds.

Citizens there can see exactly how their pensions are invested and watching the value of home grown enterprises jump is, as I know from my own Down Under family, something of a national obsession.

If the UK’s own defined contribution schemes, including the Government’s Nest default pensions, are forced to disclose all their investments then the pressure for a more patriotic and equity-related culture could be nurtured.

Savers are being given a new opportunity and asset managers a fresh responsibility. They should grasp it with both hands.

> What you need to know about the new British Isa

Trading up

Much has been made of the UK’s weak international trade performance post-Brexit.

Among the reasons for this is that analysts, including the Office for Budget Responsibility, often add import and export totals together.

This tends to give a distorted picture because imports from the EU have been falling while those from the rest of the world have increased.

Be that as it may, the great untold story of Britain outside the EU is the flying success of the services sector. An analysis by the Office for Budget Responsibility uncovers the UK’s triumph in what used to be called ‘invisibles’.

Financial services have long been a great strength but they are now supported by other business services such as management consulting, R&D and advertising.

UK services trade has emerged with the strongest growth among the G7 richest nations and was 12 per cent above 2019 levels at the end of 2023, compared with a 9 per cent improvement in the rest of the G7 in the third quarter. A reward for Britain’s light-on-its-feet ingenuity.

Green tinge

The Debt Management Office will again have its work cut out in 2024-25.

Budget documents reveal the gross financing requirement, new and replacement Government borrowing, will be £276.8billion this year, up from £241.3billion.

National Savings and Investments will lighten the burden by £9.5billion or so and there is to be a fresh issue of innovative ‘green’ bonds.

If the Treasury can find a better route for retail investment in bonds – they are a feature in Japan and Italy – that would be a bonus.

This post first appeared on Dailymail.co.uk