The stocks to buy after the Government’s summer spending splurge

Linda J. Dodson

Pubs, restaurants and tourism

The Chancellor announced that everyone in the country will get an “eat out to help out” discount throughout August. 

Meals will be half price at any participating pub or restaurant, Monday to Wednesday, with a maximum discount of £10 per head.

This should provide support for businesses in the pub and restaurant sector. Mr Hyett said the government’s voucher scheme should give consumer spending a bit of a boost in early August. However, it’s ultimate effects are difficult to judge at this stage as it is the first scheme of its kind.

Hospitality and tourism businesses will also be able to charge less VAT, with the Government reducing the rate from 20pc to 5pc  from July 15 to Jan 12 2021. This should boost sales with businesses either able to cut prices to increase demand or keep more of their revenue.

My Hyett said: “We suspect business owners will be more focused on the VAT cut in the short term. This is certainly good news for the struggling casual dining sector, and it’s no surprise to see shares in Restaurant Group, Whitbread and other leisure companies react positively to the statement,” he said.

Richard Hunter, of fund shop Interactive Investor, said the voucher programme could prove to be a vital lifeline for restaurants struggling to stay financially afloat amid the Covid-19 disruption.

“The likes of Whitbread, which owns restaurant chains Beefeater and Brewers Fayre, and Mitchells and Butlers, which owns bars O’Neill’s and All Bar One, are set to benefit. Both saw a rise in share price of 1-2pc shortly after the announcement,” he said.

Construction companies

Last week Boris Johnson announced an extra £5bn of infrastructure spending to be directed at schools, roads, hospitals and high streets. Increased infrastructure is good news for the likes of Balfour Beatty, which will likely be involved in delivery the projects, according to Mr Hyett.

“We would sound a note of caution, however, as construction projects are notoriously low margin and 1pc or 2pc is pretty good going. There are already hundreds of billions of pounds worth of projects in the pipeline so even an infrastructure spending plan in the billions will do little to the bottom lines of individual companies,” said Mr Hyett.

Insulation providers

Mr Suank also announced a £2bn green home grant. From September, landlords and home owners can apply for vouchers to make houses more energy efficient. Grants will cover at least two-thirds of cost, up to £5,000 per house and up to £10,000 for lower-income households.

Increased renovation activity would be good news for companies like Kingfisher, which owns B&Q and Screwfix, and Travis Perkins, which owns Wickes, according to Mr Hyett.

Mr Mould added that providers of insulation such as SIG and Kingspan will be looking forward to increased demand as a result of the Chancellor’s commitment to more energy efficient buildings.

Shares in bathroom equipment and accessories supplier Norcros and Topps Tiles are rising in response to the prospect of higher volumes ahead, he said.

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