Budget 2017 – what to expect and which shares could be affected

On Wednesday, the Chancellor of the Exchequer will stand up in Parliament and deliver the government’s latest budget plans. It’s worth bearing in mind that what Philip Hammond announces are simply a string of proposals – typically the changes need to be passed into law – and with the government working on such a thin majority, this may present its own challenges. Below, we take a look at some of the big initiatives which are expected to come out – and ask which companies might be affected by this.

Tuition fees

On the face of it, moves to shake up the UK education system by having students pay fees to attend university of up to £9,250 appear to have failed. The idea was that a market economy would be created, with only the most prestigious degrees charging the highest fees, but this hasn’t been the case. On the basis this is deterring some from pursuing further education, any downward pressure on fees or the repayment scheme could see applications for Uni places rise. Whilst you can’t buy shares in a University, there are plenty of dedicated suppliers where you can invest, the most obvious being those companies like Unite who provide purpose built student accommodation in many cities across the country. Renewed pressure on university places will drive demand for accommodation higher, pushing prices up, too.

Beer duty

The country is in need of some cheering up, so it’s seen that an easy win for the Chancellor would be to once again freeze the tax levied on at least some alcoholic drinks. Anything that keeps beer prices down will lend support to brewers and pubs alike. However, with the former dominated by huge multinational groups, the real impact will be seen at companies like Greene King or Punch Taverns.

Car taxes

Weekend media reports showed that there will be news about driverless cars in the budget, but more interestingly, what’s the government’s latest stance over diesel going to be? Uncertainty here has already acted as a drag on new car sales in the UK, so any clarity here – especially if there’s a formal scrappage scheme for old, pollution-heavy vehicles – could spark some life back into the sector. We have no major UK-listed car manufacturers any more, but companies like GKN are major producers of new car parts, whilst Lookers, Inchcape and Pendragon are all involved in new car sales across the country.

House builders

This is a contentious one, given the phenomenal financial support which has been handed to the sector over the last decade, yet has produced little change in terms of increased production or lower prices. However, the government still needs to do more to get more houses built, so exactly what we’ll see here is open to debate. The Help to Buy scheme could be extended, but will housebuilders themselves start to face punitive taxes if they are seen to be hoarding land in the belief that limiting supply will keep prices high? The likes of Persimmon, Bellway and Barratt will all be in focus here. 

Takeaway tax

There’s the potential for a new tax that will be rather more sweeping than simply take away food containers, but instead will levy a charge on any single-use plastic items. Presumably cheered by the success of the plastic bag tax, this seems like a good move for the environment, but a huge industry has sprung up in terms of packaging. There are now multi billion pound companies (which you’ve probably never heard of) – like Mondi, DS Smith and Smurfit Kappa – who are heavily involved in the packaging industry. Again, they have some diversification in terms of markets where they sell and a mix of both cardboard and plastic based packaging on offer, but the detail of any announcement here could see winners and losers in the oh so exciting world of disposable packaging.

At first glance it may be too easy to think that the budget is all about changing the taxes we pay on our salary and how the government then spends the proceeds on public services. As the pointers above show, the implications – at least of the 2017 statement – could have wide reaching implications for the individual companies we can invest in.

For information purposes only, not intended to constitute financial advice from us. The customer should assess the risk of  potential loss carefully and individually before investing in any financial products. Dabbl Group Limited is authorised by the FCA under the reference numbers 767263 as an appointed representative of its Principal firm VIBHS Financial Ltd, which is authorised and regulated by the Financial Conduct Authority under the reference number 613381.

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