Rachel Reeves warned against 'terrible idea' to slash tax break used by eight million Britons

They argue that Cash ISAs play a vital role in supporting economic growth by providing funds for bank lending to smaller businesses.

Scott Gallacher, chartered financial planner at Rowley Turton, said: "Trying to force savers to invest by slashing the cash ISA allowance is, quite frankly, a terrible idea."

Financial experts have issued a stark warning about potential Labour government plans to reduce the £20,000 Cash ISA limit, labelling such changes as 'terrible'

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"This lazy language has led a Chancellor to believe that reducing a tax break on one asset class will make people buy another – it won’t, they will just pay tax on their deposits."

Nottingham Building Society chief savings officer Harriet Guevara expressed similar concerns about the potential changes.

"While we support the government's broader efforts to stimulate economic growth, we remain steadfast in our view that there's no guarantee that reducing the Cash Isa allowance would actually help," she said.

"In fact there's a real concern that it will simply lead to people saving less."

Almost eight million savers use Cash ISAs each year, according to figures cited by experts

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Almost eight million savers use Cash ISAs each year, according to figures cited by experts.

The Investing and Saving Alliance (TISA) chief executive Carol Knight said: "We're relieved that the chancellor has decided not to announce any immediate changes to the incredibly popular Cash Isa."

"Using a stick, by cutting the tax benefits of Cash Isas, is not the way to boost the investment culture in the UK," she added.

“We welcome the chancellor’s announcement that they will be working with the FCA to deliver a system of targeted support, which will help millions more make effective financial decisions and feel confident in investing their cash.”