Yes, retail investment needs a boost – but the squirrel looks too tame | Nils Pratley

Red squirrel characters have a history in the public information game. Older UK readers may recall Tufty, who taught children about road safety in the 1970s. His chum, Willy Weasel, regularly got knocked down by passing cars but clever Tufty always remembered to look both ways.

Now comes Savvy Squirrel, who, with backing from the chancellor and a multi-year lump of advertising spend from the financial services industry, will try “to drive a step-change in how investing is understood, discussed and adopted”, as the blurb puts it. In translation: don’t squirrel everything away in a boring cash Isa but try taking an investment risk or two if you value your long-term financial health.

As with preventing road traffic accidents, the cause is noble. Every study on long-term financial returns reaches the same conclusion: inflation is the investor’s enemy and there is a cost to holding cash for long periods.

One statistical bible is the Equity Gilt Study published by Barclays, and a few numbers demonstrate the point. From 2004 to 2024, cash generated a return of minus 40.5% in real terms (meaning after inflation and including interest paid). By contrast, a conventional diversified portfolio comprising 60% UK equities and 40% gilts increased by 21.6% in real terms. A missed opportunity of 62.1 percentage points is enormous

Rachel Reeves’s interest in promoting the virtues of investment lies not only in helping savers but in greasing the wheels of the capital markets. Fair enough: a healthy economy needs a healthy stock market, including one that makes it easy for retail investors to participate. It is slightly ridiculous that the colossal sum of £610bn is estimated to be sitting in cash savings in the UK; it can’t all be rainy-day money or cash parked awaiting a house purchase.

Many Americans famously follow the stock markets closely and discuss their 401(k) pensions savings plans but, even by European standards, the UK’s retail investment culture lags. Sweden has popularised investment with tax-breaks and other changes. Even supposedly cautious Germans are less inhibited. So, yes, one can applaud the ambition behind the campaign.

But here’s the doubt: it all feels terribly tame.

One can imagine an alternative launch in which Reeves tried to create a buzz by cutting stamp duty on share purchases. There are good reasons to adopt that policy anyway, as argued here many times, but a cut now would grab attention. True, rules for banks and investment firms on giving “targeted guidance” are being loosened to allow more useful advice alongside the “capital at risk” warnings. Yet the current news flow in Isa-land is about HMRC’s pernickety interpretation of the tax treatment of cash held within stocks and shares account. That just creates bad vibes in the wings.

Meanwhile, the campaign’s goals read as wishy-washy. It’s all about “helping people build confidence over time”, apparently. Well, OK, that’s what the market research suggests, but “creating more opportunities for everyday conversations” is limp when, in the outside world, teenagers are trading crypto on their phones and the world is awash with smart apps. The intended audience can surely handle more directness.

As for the squirrel, it may get lost in the forest of meerkats and other CGI creatures deployed by financial services firms. For a campaign that is supposed to be doing something distinctly different, why go with a character which, on first glance, looks generic?

Back in the pre-smartphone 1970s, there was a certain shock value for the average five-year-old in seeing Willie Weasel lying injured in the road. At least the message about bad consequences was clear and memorable. One wishes the Savvy campaign well, but one fears a conversational squirrel may struggle to be heard.