The "Savvy Squirrel" campaign by Rachel Reeves is anything but clever

The goal of the chancellor's Savvy Squirrel campaign is to increase foreign investment in Britain

However, according to Merryn Somerset Webb, it is unlikely to succeed.

The latest government initiative to encourage people to invest instead of "squirrelling away" their money in savings accounts has Savvy Squirrel as its mascot. However, there's something you should be aware of regarding red squirrels. They have little skill in any area. There were more than 3.5 million of them in the UK at the close of the 19th century. There are currently less than 300,000 of them remaining in the UK, primarily in Scotland, while they are all but extinct in England and Wales. They are not as large or skilled at locating food as grey squirrels, and when they do find food, they frequently fail to hold onto it. They also fall prey to squirrel pox, which is spread by grey squirrels.

Everyone loves a saver, so it's good that they store food for the winter. However, depending on who you believe, they may lose as much as 25% of the food they store due to theft or forgetfulness (there are still disagreements among scientists regarding the red squirrel's spatial memory). They also appear to be unhelpable. There are about 47 organizations working to prevent them from completely vanishing from the UK. However, their population continues to decline. They can be thought of as the pandas of Britain.

Consider yourself a UK policymaker who is aware of all of this, is searching for a mascot for a new campaign to inspire regular people to invest, and decides on this particular animal. One that never invests and only saves; that saves in a way that ensures a negative return every year, both nominal and inflation-adjusted; and that is on the verge of extinction despite receiving substantial amounts of taxpayer funds annually.

BFIA's current problems. . .

Where "Tell Sid" left off, Savvy Squirrel continues.

Readers who are older will recall the Tell Sid campaign of the 1980s, which originated from Margaret Thatcher's intention to overthrow the UK's nationalized industries while simultaneously fostering a culture of shareholder democracy.

The Savvy Squirrel campaign is a clumsy attempt to continue where that left off (the squirrel is animated). If you haven't already, you can anticipate seeing Savvy Squirrel on nearby billboards, in Manchester taxis, or on television with the slogan "Take the next Step." The messages "Invest" and "Saved a bit? Why not invest a bit" are obviously not stupid. The savings ratio in the UK is exceptionally high, and households have a lot of moneyroughly £2 trillionin their accounts.

It's not logical. Not for the savers themselves, giving up the higher returns from an equity portfolio after you have six months' worth of emergency funds makes your future less comfortable than it could be. Not for the market; all that money could be entering the UK stock market and supporting valuations, liquidity, and the related professional ecosystem that the UK must continue to support. Additionally, if people don't invest, their retirement wealth will be lower and the state will incur higher costs.

Chancellor Rachel Reeves wants people to "have a small stake in the future of this great economy" because of this. However, there are more beneficial things that can be done if Reeves truly wants the UK to become a country of shareholders. The first could be educating the 22 million UK citizens who have auto-enrollment pensions about what it means to be a shareholder and why it is important. Since it is best to disseminate information where people are already discussing these topics, it must be done on social media rather than television. The next step would be to work on simplifying rather than complicating things. Every modification to the ISA and pension systems causes people to lose faith in the wrappers they should be using to make smaller investments.

Then there is the tax system. If you want people to buy shares, you could reduce the capital gains tax to the point where it is no longer an effective wealth tax (at current levels, it almost always taxes nominal rather than just real gains). The same is true for stamp duty on shares, another undervalued wealth tax in the UK that you pay even inside your SIPP and ISA (the term "tax-free" does not imply "completely tax-free").

Reeves may also have strong opinions about AGMs, or annual general meetings. The government is reviewing corporate reporting regulations, and there is discussion about doing away with the need for shareholder votes on executive compensation and in-person AGMs. These are terrible ideas that oppose shareholder democracy.

Lastly, danger alerts. There will be changes to these, but "capital at risk" warnings will be present everywhere you try to purchase an investment product. According to Holly Mackay of the financial research website Boring Money, the warning system is "akin to British Airways telling anyone trying to book a flight how many aviation deaths there have been in the last year" because it has been so oppressive. As a result, about 75% of cash-only savers believe that the likelihood of an investment of £1,000 today being worth more than £1,000 in five years is less than 50%. These extremely anxious individuals may have been squirrels in a previous life, or the regulators may have overreached.

Risk warnings should be reduced, and listed companies' and funds' capacity to quickly promote their products should be increased. There is merit to the Savvy Squirrel campaign. It demonstrates that the government is aware of the issue with the UK's investment climate. But it also indicates that they won't be able to solve it anytime soon. At least not in this manner.