Shifts in the UK economy are changing attitudes to investment risk

The United Kingdom is a nation of savers, with an exceptionally low risk appetite when it comes to investing. Could a brightening economic outlook help to change our long-standing distrust of stocks and shares? 

Residents have long preferred to save rather than invest, and ISA savings patterns underline an investment gulf when it comes to wealth management. 

“In 2023/2024, 9.94 million Cash ISAs were subscribed to, significantly outnumbering the 4.09 million Stocks and Shares ISAs,” according to data by a Wealthify report on the UK’s national preference towards saving. “This trend is consistent with 15% of UK adults holding a Stocks and Shares ISA by 2025, compared to nearly double this amount (29%) holding a Cash ISA.”

Last year, one survey revealed that 17% of UK adults had never even heard of a Stocks and Shares ISA, while a quarter of respondents claimed to know nothing about the tax-efficient investment product. 

Given that Chancellor Rachel Reeves had planned to use the recent Autumn Budget to encourage more savers to invest by lowering Cash ISA allowances to £12,000 per year while maintaining their investment-focused Stocks and Shares counterparts at £20,000, the size of the UK investment gap may be too wide. 

According to a YouGov poll conducted in July 2025, just 31% of Britons suggested that they would be willing to invest in stocks and shares, with 65% of those wary of investing claiming that the associated risk is too high. 

Despite this, Unbiased data shows that the average annual return for Stocks and Shares ISAs over the past 10 years has far surpassed fixed-rate focused Cash ISAs, returning 9.64% versus 1.21%. 

Even the prospect of historically higher returns and upcoming Cash ISA cuts doesn’t appear to be enough to sway the UK’s savers. Research polling of 1,400 Cash ISA savers (of which 80% were over 65) has shown that 62% would be unwilling to invest in Stocks and Shares ISAs even if their allowance was cut, with most respondents preferring to open a regular savings account should they lose the ability to save through an individual savings account. 

UK Economy May Improve Risk Appetite

The UK’s aversion to risk may be more understandable when considering the fragility of the economy in recent years. 

Residents have experienced three recessions in the 21st century alone, with the most recent arriving on the back of the pandemic in 2020, as well as 2023 and 2024 following a sustained period of high interest and high inflation. 

In these environments, savings can not only be far more stable for wealth management, but higher interest rates can pave the way for higher returns over time. 

However, the UK economy has shown significant signs of strength in recent months. In November, GDP growth beat expectations to reach 0.3% thanks to factors such as an uptick in car production and a strong rebound from post-budget uncertainty. 

There are also signs that the brightening economic environment is opening the door to new investment opportunities in UK stocks, with the FTSE 100 outpacing the United States’ S&P 500 index to grow 21.5% in 2025.

Although the Bank of England opted to hold interest rates at 3.75% in February, the knife-edge vote that brought the decision indicates that another cut is likely to be on the way sooner rather than later. 

Should rates fall lower towards neutral levels, they could help to support a calmer economy with lower inflation rates and steady job creation, helping more UK residents to shake off their perceptions of risk in stocks and shares. 

Breaking Down Barriers to Investing

Another factor that can help to fuel investment appetite in the UK is the rise of fintech-powered investment platforms that make it easier than ever for investors to manage their portfolios and buy stocks. 

Despite the UK entering 2024 in a recession, retail trading app downloads increased throughout the year by over 50% compared to 2023, paving the way for unprecedented control over wealth management. 

However, greater access to investment tools appears to work both ways in a nation that experiences lower sentiment towards investing. As geopolitical concerns interrupted investment strategies last summer, UK retail investors pulled £1.8 billion from equity funds in July at a rate that was almost double the £912 million they withdrew in June. 

This highlights that a strong perception of the nation’s economic health is pivotal to UK investment trends. It also suggests that a continuation of the brightening economy could play a key role in helping residents to embrace investing over saving. 

Supporting UK Investing

Although residents are right to associate investing with greater risk compared to saving, historical trends show that Stocks and Shares ISAs have consistently outperformed their cash counterparts over the past decade. 

Savers may have indicated that they’re willing to spurn the Chancellor’s attempts to encourage more investing in the UK; it could be the clearing economic outlook that helps to pave the way for renewed attitudes towards risk. 

The prospect of a lower interest rate environment and measurable stability in the economy, coupled with frictionless access to investing tools, could create a conducive environment to transform age-old attitudes towards investing in the UK. 

The freedom to make a balanced choice based on risk appetite could help to transform wealth management in the future.