What caught my eye this week.
For most of the week, my Weekend Reading links included articles warning that Rachel Reeves was finally going to cut the cash ISA allowance at her Mansion House speech next week.
The rumours had run for months. At last reality was at hand!
Yet by the end of the week, it was all change.
From the BBC:
Rachel Reeves was thought to be considering reducing the allowance for tax-free cash savings, in a bid to encourage people to put money into stocks and shares instead and boost the economy.
But strong opposition from banks, building societies and consumer campaigners mean any such move has been put on hold.
The Building Societies Association said it welcomed the Treasury stepping back from making any “hasty decisions” on ISAs.
So, we’re finally out of the woods on this one?
Not so fast. That same BBC article quotes a Treasury spokesperson as saying:
“Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.”
…and it adds that changes have not been ruled out for the future.
Similar pieces in The Guardian and the FT tell the same on/off story.
Stranger than fiction
Perhaps you blame the media for this.
After all, nothing gets a certain class of drive-by readers clicking and sharing like a threat to their personal wealth.
That was my co-blogger The Accumulator’s initial take.
TA compared the early cash ISA rumours to the annual ‘Pension Allowance to be SLASHED’ bogeyman that’s brought out every March – apparently almost in concert with wealth-gathering (and advertisement-running) financial services firms – only for things to stay the same most years.
But I judged there was more substance to the cash ISA threat. And by Thursday I was readying myself for some modest but smug satisfaction at being proven right.
Foiled again.
Smoke and fire
There are reasons why I don’t entirely blame the media for the ISA story however.
Firstly, many people want to hear about this stuff. Even if it is all rumours.
When the threat to cash ISAs flared up for the second or third time earlier this year, I ignored it in these links. I felt it was time to wait for concrete news from the Chancellor.
Yet readers asked me afterwards why I’d not included the story. Some even sent me links to it themselves.
The more important reason not to shoot the messenger however is it’s the Government itself that is cranking the handle on this rumour roundabout.
That’s why all the main outlets ran with the ‘no change’ story within hours of each other on Friday.
The official word had come down from on high that cash ISAs were to be left alone. So could they please mention this ASAP to their readers?
Make up, break up
For decades now government policy has been more and more determined by focus groups, public relations concerns, and the electoral calculus, as much as by what the country really needed.
And for the past 15 years or so, this strategy has included a much more explicitly open dance to trail potential policies in the press to see how the public reacts.
Whoever is running stuff up the flagpole in Downing Street must have severe tennis elbow by now!
Of course, politicians have rarely ever given us entirely what we needed, unencumbered by worries about the democratic popularity contest. Perhaps unity governments during wartime were the exception.
But with the present crew the situation is getting out of hand.
We saw it before Rachel Reeves’ first Budget. Her doom-laden stocktake on Labour winning the General Election raised more questions than it answered, leading to months of speculation. From an early mood of relief and even optimism, Britain fell into almost a paralytic stupor waiting to find out what Reeves would axe, or where taxes would rise.
And now savers have endured many months of wondering about their cash ISAs – thanks entirely to trial balloons being floated up from Whitehall.
Ask the audience
I understand why they feel the need do this.
Much of the electorate has lost all interest in evaluating policies. The Overton Window to make outlandish pronouncements in opposition about everything from immigration to taxation to nuclear submarines is wide open. But that same fact-free tribalism narrows the freedom to act when in power.
On top of that, judging by last week’s welfare U-turn Labour can’t even predict how a few hundred of its own MPs will respond to its policies. The electorate must be a black box by comparison.
However making up legislation as you go – based on how much furore your hints caused on the Internet and whether you think you can handle any further backlash – is no way to run a country.
Many of us despair at the US president’s reality TV show-style decision making.
But this policy-by-public-plebiscite experiment we’re running is arguably only a more genteel version.
Deal or no deal
There are consequences everywhere – but at Monevator our concern is with people’s finances.
On the one hand, MPs and mandarins alike lambast the public for not thinking long-term about their investments, or for not putting enough money towards their distant retirements.
Yet at the same time ministers fiddle with our savings and pensions vehicles with every other Budget – and threaten to make twice as many changes in between.
Enough is enough. This government started with five long years ahead of it and a big majority. Plenty of time to do what it thought was right upfront, and then to manage the consequences in the aftermath.
Pull the bandaid off if you’re going to do it. Picking at it will just make it worse.
Have a great weekend.
From Monevator
The Slow and Steady Passive Portfolio update: Q2 2025 – Monevator
Time to move into prime London residential property? – Monevator
From the archive-ator: The snowball and the paper trail – Monevator
News
Bank of England rolls out looser mortgage rules to help first-time buyers… – Guardian
…with Reeves set to launch a permanent mortgage guarantee scheme – FT via MSN
UK economy shrinks for a second month in a row – Sky
Forcing pension funds to buy UK assets ‘a form of capital control’, says Lloyds boss [Paywall] – FT
Triple-lock pensions to cost 3x more than originally forecast… – BBC
…while some benefits claimants take home more than minimum wage workers – City AM
Monzo fined £21m for customer sign-up check failures – Guardian
SpaceX set to be the world’s most valuable private firm – Semafor
London home sellers forced to knock thousands off asking prices – Standard
Real men burn stuff – Paul Krugman
London stock market in peril mini-special
These charts show the scale of the London Stock Exchange’s decline – City AM
Looser bonus rules and tax breaks needed to save LSE, says the CBI – Guardian
Products and services
Major banks cut mortgage rates – This Is Money
Eight ways to save on holiday spending and cut card costs – Guardian
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this link. Terms apply – Charles Stanley
Revolut now offers stocks and shares ISAs – City AM
Fintech Moovable launches new rent-a-bedroom service – Standard
Life insurance: the three key questions to ask – Which
Get up to £2,000 when you switch to an Interactive Investor SIPP. Terms and fees apply. – Interactive Investor
Free days out with MSE’s SuperSaverClub – Be Clever With Your Cash
The reality behind those €1-to-buy Italian homes – Guardian
All financial products will be on-chain, Franklin Templeton exec says – Blockworks
Pastel-coloured homes for sale, in pictures – Guardian
Comment and opinion
Why Lifetime ISAs divide opinion – BBC
How to invest your enormous inheritance – The Economist via Elm Funds
Room to manoeuvre – Humble Dollar
It could be worse: South Korea’s ‘peak wage’ system punishes the elderly – Guardian
Different kinds of rich – A Wealth of Common Sense
How Section 899 was scrapped from the Trump’s big US bill [PDF] – Raymond James
Evaluating the bucket retirement strategy after Covid lessons – Think Advisor
The children sitting on six-figure Junior ISAs – This Is Money
How to make more money without working more hours – Of Dollars and Data
Long gilts mini-special
Buy long-term gilts ahead of potential tax hikes, says UBS – This Is Money
What ‘vulnerable’ UK finances mean for gilts – Interactive Investor
Should you lock in a 5.38% rate for 30 years? – Motley Fool via Yahoo
Gilt traders seize control after Labour’s retreat on welfare reform – T.I.M.
Naughty corner: Active antics
Investing in bruised blue chips – Rebound Capital
How to get and keep a job at a multi-strat hedge fund [Podcast] – Odd Lots via Apple
A new twist on an old Buffett bet [Free to read] – FT
The latest US jobs report raises the risk of recession – Bonddad
Where have all the risk premia gone? – FT
Kindle book bargains
The Tipping Point by Malcolm Gladwell – £0.99 on Kindle
Chip War: The Fight for the World’s Most Critical Technology by Chris Miller – £0.99 on Kindle
The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone – £0.99 on Kindle
Essentialism: The Disciplined Pursuit of Less by Greg McKeown – £1.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
Zonal pricing is dead. Now let’s be less absolutist on 2030 goals – Guardian
World’s most porous carbon-trapping powders hit the market – Nature
[Incorrect] Reform councillor calls man-made global warming a ‘hoax’ – BBC
Britain and Europe need to get serious about air conditioning [Paywall] – FT
Reintroduced Golden Eagles are struggling in Ireland – The Conversation
Why the Texas floods were so devastating – BBC
The environmental impact of agricultural crops – Klement on Investing
Robot overlord roundup
A deep dive into the Waymo vs Tesla robotaxi battle – Forbes
Not at the dinner table
From dollar dominance to the slop machine – Kyla Scanlon
Statistical evidence of the decline in political discourse – Klement on Investing
Free market economics is working surprisingly well in Argentina – Noahpinion
The tariff beatings will continue until morale improves – Paul Krugman
Ode to America – Net Interest
In modern Britain, any sort of protest can lead to jail – Guardian
Off our beat
How fake-will fraudsters stole millions from the dead – BBC
A guide to visionary architect Norman Foster – Wallpaper
How smell guides our inner world – Quanta
US measles cases hit highest level since declared eliminated in 2000 – John Hopkins
A radical 1960s experiment left thousands unable to read – Guardian
Wimbledon economics – Economics Observatory
What a mid-life crisis means for Millennials – GQ
“A difficult person who is waiting to die”: Patricia Highsmith’s final days – Guardian
American science is about to face its largest brain drain in history – Big Think
Why is everyone partying less? [US but relevant] – Derek Thompson
And finally…
“Progress happens too slowly to notice, but setbacks happen too quickly to ignore.”
– Morgan Housel, The Psychology of Money
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