ISA Sales 'Fall Sharply'

Fewer Individual Savings Accounts (ISAs) were taken out last month than at any point since January, new figures show.

According to the Investment Management Association (IMA), sales of the tax-free savings accounts stood at £139.5 million for June - a big drop from May's figure of £652.6 million and June 2007's total of £747.8 million.

The ongoing credit crunch is thought to have contributed to this sharp decline in two ways. Firstly, the constriction in personal finances that have been felt by many as a result of the crisis has impeded on many households' ability to put money aside in savings accounts. What's more, the severe volatility that has been experienced on global stock markets has also checked demand for stocks and shares ISAs, which invest savings in equities.

"Net retail sales of both onshore and offshore funds returned in June to the subdued levels of earlier in the year. The exception was the new absolute return sector," said IMA chief executive Richard Saunders.

"Taken with the continued outflows from equity funds [ie, stocks and shares ISAs], this clearly demonstrates the limited risk appetite of investors at the moment."

After hitting a high of over 6,300 in May, the UK's flagship FTSE 100 index has fallen sharply, sinking to a low of 5,100 earlier this month and then recovering slightly.

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