Reeves is reportedly planning to slash the annual Cash ISA contribution limit from £20,000 to £4,000.
The change could be announced in her Spring Statement on March 26, and come into force from the new tax year on April 6.
It follows pressure from City investment managers, who have told Reeves that pushing savers from cash into shares will boost UK businesses.
Reeves has hinted that she wants to shift the balance in favour of Stocks and Shares ISAs.
By doing so, she hopes to channel more funds into British companies and foster a US-style culture of retail investing.
But many are deeply opposed.
Nearly eight million Britons will save in Cash ISAs this year, with around 18 million holding one in total, including half of all pensioners.
They’ve saved a staggering £300billion. So huge sums are at stake.
Cash ISAs offer a safe haven from stock market volatility, with the major benefit of tax-free interest for life.
Given today’s political and economic uncertainty, their security and predictability are more vital than ever. Reeves tinkers with them at her peril.
Her plan may not even work. There’s no guarantee savers will invest in UK companies if their Cash ISA benefits are stripped away.
They may instead plough money into the booming US market, undermining her goal entirely.
There’s another problem.
Global markets are looking fragile right now, especially in the US. And one man is largely to blame: Donald Trump.
As we saw in his treatment of Ukrainian president Volodymyr Zelenskyy, Trump is a wildcard. His entire strategy is to stir up chaos, regardless of the consequences. Now, his tantrums threaten a stock market crash.
The US market has been on an extraordinary run for years, powered by tech giants like Apple, Amazon, Microsoft and Tesla. But cracks are beginning to show.
The S&P 500 is at its most expensive level since December 1999, just before the dot-com bubble burst. Over the next two years, global markets crashed by half.
Cash ISA savers don’t want that kind of risk. Their capital is secure plus they get decent interest rates of up to 4.5% right now.
The S&P 500 has stalled in recent weeks, rattled by Trump’s escalating trade war threats. He’s vowing to slap 25% tariffs on major trading partners, including Canada, Mexico, China and the EU.
By driving up prices, these tariffs could cost the average US household an extra $1,200 a year.
Inflation will spike, interest rates rise and both households and businesses will feel the squeeze. It could also trigger retaliation from trading partners, making things worse.
Trump’s pledge to deport 18 million immigrants could cause severe labour shortages, driving up costs and further fuelling inflation.
Maybe he’s bluffing. But markets are nervous.
Bitcoin – often seen as a canary in the financial coal mine – has already plummeted. It’s down more than 20% since Trump’s inauguration in January, from $108,000 to $85,000.
If stock markets follow suit, panic could spread.
Trump supporter Elon Musk‘s Tesla is feeling the heat. The electric car maker’s shares have crashed by almost a quarter in the last month.
And this is the moment Rachel Reeves has chosen to push Britons into the stock market. It’s a huge gamble.
Of course, markets are always volatile. And over the long term, investing in shares remains the best way to build wealth.
But it should be a personal decision.
If Reeves forces savers out of Cash ISAs and into shares just as they crash she risks a huge backlash.
One that could prove disastrous for both her and millions of Britons who never wanted to take risks with their hard-earned cash in the first place.