Sunak’s Summer Statement: should more have been done for young savers?

This mini-Budget for young people follows a Spring when 25 to 34-year-olds flocked to the stock market.

Today’s summer statement in many ways is a Summer Statement for Young People – but is it targeted in the right way?

The £2 billion ‘kickstart scheme’ to create jobs for young people is welcome. But on a temporary stamp duty holiday for the first £500,000 of all properties, interactive investor has concerns.

Moira O’Neill, Head of Personal Finance, interactive investor says: “Anyone who has ever bought a property knows all too well that stamp duty on property is painful. But whilst it feels churlish to criticise this temporary reprieve – Britain’s love of property is well known – I do have caveats.

“If we are heading into one of the deepest recessions in living memory, do we really want to be encouraging young buyers to load themselves up with debt? We could help young buyers far more if we let the property market find its own natural level.

“One of the stand-out themes of the lockdown is that 25-34 year olds have discovered investing. In quarter two 2020, this age group has seen the strongest growth of new ISA and SIPP account openings with interactive investor, up 275% and 258% year on year, respectively. It could be that young people are realising that today is that rainy day we could all have been saving for. 

“Not everyone’s first forays into investing will go to plan, but the current crisis has kickstarted a quiet savings revolution in the UK, and we would like to see more incentives from the Government to encourage young people to save for the long term. Financial education has to be part of this. 

“Whilst there’s a balance to be struck between saving and spending, house buying is not necessarily a route to financial security. Over the long term, your pension could well be your largest asset if you start saving early. Financial modelling has shown that if you start paying into a pension at 25, assuming 6% annual growth, by age 65 your pension could be worth almost double your property.” (see notes to editors for the pension research).”