Barclays: UK’s investment gap swells to over £610 billion

New data and analysis from Barclays reveals that the UK’s investment gap grew by over 30 per cent between 2022 and 2024, with approximately 15 million UK adults now holding over £610 billion of “possible investments” in cash. These figures are a conservative estimate, based on savers who already hold more than six months’ income in cash savings, and reveal the scale of the opportunity if the UK can empower more people to invest.

The most significant macroeconomic factor influencing the growth of the UK investment gap between 2022 and 2024 was the rise in interest rates over that period. In May 2022, the Bank of England set interest rates at 1.0 per cent. By May 2024, rates had risen to 5.25 per cent. This increase has had two main effects:

1. Mechanical Growth: Cash savings have grown simply through the accrual of interest. Barclays calculates that, in the absence of any action by the 13 million individuals identified in 2022, their cash savings would have increased by approximately £35 billion due to the interest rate rise alone. This accounts for 23 per cent of the increase observed between 2022 and 2024.
2. Behavioural Shift: The higher interest rates have made savings accounts more attractive, especially in the context of rising geopolitical unrest such as the wars in Ukraine and the Middle East, which have made certain investments seem riskier.

UK investment gap – difference between 2022 and 2024

Barclays believes that the solution lies in changes to regulation and consumer support. Over the past year, Barclays has published two reports setting out public policy recommendations to address the UK investment gap: ‘Empowering retail savers to engage with investing‘ and ‘A New Message to Tell Sid’.

Many of Barclays’ recommendations are now scheduled for implementation through the Government and Financial Conduct Authority’s (FCA) Advice Guidance Boundary Review, as well as the recently announced nationwide retail investment campaign, chaired by the CEO of Barclays Private Bank & Wealth Management, Sasha Wiggins.

However, the pace at which the UK’s investment gap has grown – over 30 per cent in only two years – reinforces the need for collective action across government, regulator and industry.

In addition, Barclays believes that further support measures should be considered*, for example an FCA-accredited badge to help would-be investors identify entry-level investment products, and the ability to compare these entry-level products in easy-to-access comparison tables.

Sasha Wiggins, CEO of Barclays Private Bank and Wealth Management, commented:

“Investing can deliver better financial outcomes for individuals and supports economic growth. However, the UK’s investment gap has grown by over 30 per cent in just two years, emphasising that significant efforts are still required to transform the UK into a nation of investors.

“In recent months, we have seen collaborative action and positive steps from regulators and policymakers – the Advice Guidance Boundary Review and the retail investment reforms announced by the Chancellor in her Mansion House speech present a unique opportunity to reshape the UK’s investment culture. The task now is to turn these reforms into lasting behavioural change, helping savers feel confident, supported and better able to understand risk. That focus on building confidence will be central to industry’s work as part of the UK’s new retail investment campaign.”