New research has delivered a blow to Rachel Reeves’ reported plans for ISAs as young savers fear it would impact their ability to afford their own home.
Brits also think that it could impact their pensions.
Ms Reeves is thought to want to ditch the £20,000 ISA limit, limiting the allowance to £4,000.
The survey saw 2,000 cash ISA holders quizzed, with 20% saying this would impact their ability to put down a deposit for a house.
Four in 10 (41%) of 25 to 34-year-olds said a cut in the allowance would impact their ability to put down a home deposit, a Nottingham Building Society study found.
The research also concluded that 34% fear their ability to save toward their retirement would be impacted.
Moreover, if the allowance is cut, an estimated 2.5million say they would “simply save less”.
Finally, a majority “oppose Cash ISA allowance being cut”. This rises to three in four over 55s.
The building society has therefore called on the Chancellor not to go through with the reported proposal.
It comes as a separate survey “lays bare the scale of the challenges First Time Buyers (FTBs) already face in getting on the housing ladder”.
Nottingham Building Society said: “There has been a marked increase in the number of FTBs needing financial support to secure a mortgage over the last year, with a third (31%) of mortgage brokers reporting a rise in multi-generational purchasers pooling resources to fund deposits.”
Harriet Guevara, Chief Savings Officer the building society, said: “Cash ISAs are an essential tool for millions of savers across the UK, allowing them to save for key life moments like buying a house or planning for retirement.
“With economic uncertainty high and the appetite for these products strong, limiting people’s ability to save towards their goals and to build a financial safety net would be the wrong step at the wrong time.
“While we support the Government’s broader efforts to stimulate economic growth and drive investment in UK businesses, there’s no guarantee that reducing the Cash ISA allowance would actually help.
“What’s worse, there’s real concern that it will simply lead to people saving less. Our research is clear: limiting how much people can put into a Cash ISA won’t immediately lead to a rush into stocks and shares ISAs instead.”
