A couple of weeks ago , Claer Barrett wrote an article about the depression that is forcing money into short term savings plans (not into an investment into our and our country’s future).

This weekend , the FT followed up with an article with macro confirmation that we aren’t spending, we aren’t investing – we’re hoarding here in the UK.

This isn’t happening in our competitors (the G7) , it is unique to the UK and we have to ask why it is happening.

Here’s what Claer wrote (my emboldening). The blame for this happening in the UK and not elsewhere is placed firmly at the door of the Government.

The chancellor’s gloomy party conference speech has Britain braced for major tax rises at the Budget next month, and speculation about tax changes to pensions and Isas is once again rife.

At the Spring Statement back in March, Rachel Reeves vowed to “boost the culture of retail investing” in Britain. However noble her ambition to encourage more of us to invest, what we have instead is a culture of fear.

Worries about imminent rule changes are destroying confidence in the benefits of long-term investment. Earlier this year, there were months of speculation that the annual £20,000 cash Isa allowance would be slashed to encourage more savers to switch into stocks-and-shares Isas — a desperately flawed assumption.

And the result? Record numbers of people are stuffing cash into the tax-free savings accounts. Coventry Building Society has calculated that more than £59bn has been saved into cash Isas since Reeves became chancellor in July 2024, potentially saving UK households £300mn in tax.

Instead of a stick, the estimated £120mn cost of removing stamp duty on UK shares that retail investors hold in Isas could have been a very persuasive carrot.

The rumoured stamp duty holiday for new London Stock Exchange listings is welcome, but it doesn’t go far enough.

Nevertheless, following my recent column about the dash to take tax-free cash from pensions ahead of the Budget, quite a few (older) FT readers have emailed me to say they favour investing using Isas to hedge against the (greater) risk of pensions being targeted. The chancellor was hotly tipped to be looking at reducing the level of tax-free cash one can take from a pension at the last Budget — but this failed to materialise.

A poll this week by Rathbones, the wealth manager, found that withdrawing money from pensions early was the most common financial regret of those who pre-empted what was going to be inside the famous red box.

Inside the famous red box

The tax-free cash rumour mill is whirring again ahead of November’s Budget, prompting pension withdrawals to hit record levels.

There are also fears of changes to higher-rate pension tax relief and restrictions to salary sacrifice, which has become even more popular in the past year as it enables employers to save on staff national insurance contributions.

This is influencing investor behaviour in different ways. Those of us who are still growing our retirement pots may well be tempted to pay more into pensions while the annual allowance remains at a generous £60,000.

But those closer to retirement age are weighing their options, especially as we await the finer details of how inheritance tax will be applied to unspent pots from 2027.

Some readers have adopted the strategy of recycling their tax-free cash into stocks-and-shares Isas, making use of their own and their spouse’s £20,000 annual allowance.

“If spread over two tax years, this gives £80,000 between a couple,”

one reader pointed out to me. Alternatively, if tax-free cash is used to pay down a mortgage — as many readers aged over 55 say they plan to — the subsequent reduction in total mortgage payments (interest and capital) could be invested in a stocks-and-shares Isa instead.

Regardless, thoughts of tax rises and the risk of our flatlining economy tipping into recession are prompting more of us to hoard cash.

If people have any spare money, they’re more likely to stash it than splash it, according to this week’s ONS household savings data.

Fragile consumer confidence has been blamed for sluggish sales across the retail and hospitality sectors in recent months, but this is partly down to inflationary pressures from the last Budget that are still impacting household budgets.

Analysts blame much of the rise in UK food prices on supermarkets and restaurants passing the cost of higher employers’ national insurance and minimum wage increases on to their customers.

Clive Black, the veteran retail analyst at Shore Capital, says the biggest trend at supermarket checkouts is the rise of premium “dine in at home” ranges, with sales growing at 15-20 per cent over the past two years.

With a standard meal for a family of four in a chain restaurant easily breaking the £100 barrier, paying £15 to dine in à deux feels like a bargain. The same goes for fancy “ready to drink” cocktails (I am a particular fan of the Moth spicy margarita). At around £4 a can, it’s less than half the price you’d pay for a similar drink in a pub.

This week, the British Beer and Pub Association warned that 2,000 watering holes are at risk of calling time once and for all.

But that’s the paradox of thrift — if everyone starts to cut back, it will be disastrous for the consumer economy. Unfortunately, we have several more weeks of pre-Budget uncertainty to endure.

The retail and hospitality sectors — and those of you who hold shares in these companies in your investment portfolios — will be praying that the late Budget doesn’t overshadow Christmas trading.

This is a brilliant explanation of what is going on. But it is only touching on the financial neurosis that is upon us.

In another article I wrote this weekend (with Andy Young) , I argue that we need to think much more about our family, our house and our work before saving money we might do better spending. I would like to see a debate on this and would urge you to read the excellent paper on this blog.

Claer Barrett is the FT’s consumer editor; claer.barrett@ft.com