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British savers have more than £614bn of spare cash that could potentially earn higher returns from investments, according to a new report.

Analysis by Barclays bank found that money that could be in “possible investments” has grown by a third since 2022, up from £460bn.

Barclays said about 15mn UK adults hold excess cash — up from 13.2mn in 2022 — noting that the jump in interest rates at the end of 2021 made returns on savings products more attractive.

The excess amount, which Barclays said was based on people who already hold more than six months’ income in cash, underscores the challenge facing the government as it tries to funnel more money into investments.

Parts of the City, including asset managers and banks, could benefit from more inflows into higher-fee investment products.

The government is also keen to channel more cash into the UK stock market through reforms that include allowing banks to send investment ideas to savers with cash sitting in low-interest accounts, and launching an advertising campaign to promote the opportunities of investing to consumers.

“Investing can deliver better financial outcomes for individuals and supports economic growth,” said Sasha Wiggins, chief executive of Barclays Private Bank and Wealth Management.

“However, the UK’s investment gap has grown by over 30 per cent in just two years, emphasising that significant efforts are still required to transform the UK into a nation of investors.

“The task now is to turn these reforms into lasting behavioural change, helping savers feel confident, supported and better able to understand risk.”

Barclays said that the “most significant” economic factor fuelling the growth of cash savings over this period was the rise in interest rates, which jumped from 1 per cent in May 2022 to 5.25 per cent by May 2024.

The increase in rates lured more people into cash, as well as boosting the value of savings through accrued interest. Barclays calculates that cash savings would have risen by about £35bn in 2022 due to interest rates alone.

The government has considered more radical measures to entice more savers into investments, partly with the aim of delivering better retirement outcomes as well as opening up more money for investment into listed stocks.

London’s stock market has suffered in recent years as larger investors such as domestic pension funds diverted more money into overseas equities instead.

The government held discussions earlier this year with asset managers and banks about the potential to cap the amount that can be held in tax-free cash Isas in an attempt to channel some of this £300bn into London-listed shares.

But building societies and consumer champions pushed back against the idea, warning that it could increase the cost of mortgages and remove a pot of money that people use for practical needs.