The unveiling of a new British ISA helped give domestic stocks a modest lift after its announcement in the Budget.

The £5,000 limit on the new tax wrapper, which can only be invested in UK assets, will be in addition to the existing £20,000 ISA allowance.

The key test will be whether this provides a meaningful boost in terms of flows into UK equities and helps improve what has been a very difficult market for small cap companies in particular.

Tax and financial planning expert at Quilter (QLT), Rachael Griffin says: ‘So few people use their total ISA allowance in a given tax year too so the allure of £5,000 more is only appealing to much higher net worth people. The reality is we need to better incentivise the millions languishing in cash ISA accounts to be put to work in the stock market.

‘While the British ISA is presented as a strategic move to bolster the UK stock market and economy, it is fraught with potential pitfalls and may not address the root causes of the challenges facing the UK’s financial sector. The measure is likely a politically motivated stunt ahead of upcoming elections, rather than a well-considered strategy aimed at sustainable economic growth.’

Chancellor Jeremy Hunt also announced plans for new requirements for pension schemes to disclose their level of international and domestic holdings as a potential precursor to steps to encourage them to invest more on these shores.

The widely trailed 2p cut to national insurance may provide some support to consumer-facing firms at the margin if it means households have a bit more money in their pocket.

Hunt announced plans to press ahead with the sale of shares in NatWest (NWG) to retail investors this summer, subject to market conditions. The stake which the government acquired in 2008 to rescue the then Royal Bank of Scotland was acquired at 500p. As we write NatWest shares trade at 254p.

News of an alcohol duty freeze out to February 2025 helped lift pubs operators like JD Wetherspoon (JDW), the owner of All Bar One Mitchells & Butlers (MAB), and Marston’s (MARS).

A new levy on vaping was introduced but the accompanying extra duty on tobacco to help push people from cigarettes to less harmful alternatives helped vape companies Chill Brands (CHLL) and Supreme (SUP:AIM). Elsewhere the sunset clause on the windfall tax for the UK oil & gas sector was extended until 2029. 

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