Jeremy Hunt, the UK Chancellor, recently introduced a tax-exempt UK ISA (Individual Savings Account) in an attempt to stimulate interest and invigorate confidence in London’s struggling financial markets.
For quite some time, UK shares have been underperforming, and numerous public figures have exited the London market. Because of this, pressure was on Hunt to take action. However, Dan Neidle, a tax campaigner, was not taken by Hunt’s new ISA.
According to Neidle, FTSE 100 companies that do not have operations in the UK, like Antofagasta and Airtel Africa, can presumably utilise a UK ISA. However, significant British employers like Google and Citigroup can’t. It’s also worth noting that the bulk of FTSE 100 firms are international businesses, generating the majority of their income outside of the UK.
Moreover, there’s also the concern of home bias. On average, a quarter of a British portfolio is invested domestically, even though the UK only accounts for 4% of global market capitalisation. Critics are also sceptical of Hunt’s unwillingness to eliminate stamp duty on UK shares.
In sum, it seems difficult to dispute Neidle’s viewpoint that the UK ISA is “merely a band-aid that won’t resolve the issues plaguing the FTSE”.
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