# Households ‘have been shoring up cash Isas amid uncertain economic backdrop’

By Andrew Prosser — 2025-12-03

Andrew Prosser, head of investments at InvestEngine, said: “Today’s figures highlight just how cautious households have become, with cash ISA balances rising 14% to £207 billion as people build precautionary buffers in an uncertain economic climate. Saving for security is entirely understandable – but the widening gulf between saving and investing is becoming increasingly clear and the Government’s decision to reduce the cash ISA allowance from £20,000 to £12,000 will only sharpen this divide.

“Our analysis shows 7.1 million people contributed to a cash ISA last year, and more than 2 million -almost a third of them – put in over the new £12,000 limit. These savers will now see any interest earned on money outside the ISA quickly breach the Personal Savings Allowance, especially with rates around 4.5%.

“Therefore, now is a good opportunity for those who haven’t invested before to consider a Stocks & Shares ISA for the extra £8,000 no longer covered by the cash ISA limit.

“Cash ISAs still matter for short-term needs, but if the aim is to help people build long-term wealth, we need education and simplicity — not policy whiplash or shifting rules. People shouldn’t be pushed into patriotic investing or complex quotas. They need clear tools and confidence to make informed decisions.

“That’s why we’ve built InvestEngine around low-cost, diversified ETFs. Precautionary saving will always have its place, but with a stable ISA system and better financial understanding, far more households could benefit from the long-term gains that investing can offer.”

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