The Autumn Budget was released today (26 November) after months of fevered speculation. On the whole, markets liked what they saw. The FTSE 100 and FTSE 250 indexes both rose about 1%.
As with any Budget, there are bound to be winners and losers from policy decisions. In my opinion these three top UK shares stand to benefit substantially from the Chancellor’s latest plan: Greggs (LSE:GRG), Barratt Redrow (LSE:BTRW) and M&G (LSE:MNG).
But why?
Warming up
Greggs shares is one of the FTSE 250‘s biggest winners following the Budget. Its shares sprang roughly 5% higher, helped by government plans to boost the national minimum wage.
From next April, 2.7m Britons will receive a larger pay packet, with over-21s getting a 50p boost to £12.71 per hour.
Rising wages are an enduring problem for retailers. So why has Greggs’ share price risen?
In a nutshell, the plans will give its core demographic more money to buy coffees, sausage rolls and other hot and cold treats. Greggs has focused on value products, appealing to lower-paid workers. It could therefore be one of the main retail beneficiaries of the wage hike.
Consumer spending remains weak. But today’s news provides the baker a crumb of comfort.
Home comforts
Housebuilders such as Barratt Developments are also toasting the Autumn Budget. This particular FTSE 100 company rose sharply in the hours after the Chancellor’s speech.
The boost to housebuilders wasn’t thanks to measures like Stamp Duty cuts, mortgage guarantee schemes, or assistance for first-time buyers. Instead, share prices rose after yields on government debt dropped post-Budget in a sign of market confidence.
This indirect factor is critical for the housing market. The lower the rate on Gilts, the more affordable mortgages can be for homeowners.
Barratt aims to build between 17,200 and 17,800 homes this financial year, up from 16,565 last time out. Cheaper home loans will be essential for it hitting this target.
Housebuilders remain sensitive to the broader economic landscape in the UK. But I’m optimistic Barratt’s profits will steadily rise, driven by a rising national population and increasing new homes demand.
Another FTSE 100 riser
Wednesday’s Budget brought new measures that make things tougher for savers and investors.
Cash ISA allowances have been slashed to £12k a year from £20k previously, with effect from April 2027. Dividend tax rates are also rising from the next financial year.
This means millions of Britons will likely be seeking advice on how to protect themselves from the taxman and grow their wealth. It could also prompt a surge in demand for non-cash investing products like Stocks and Shares ISAs.
FTSE 100-listed M&G is one such company with the brand power, the scale and the product ranges to exploit this opportunity. Today the company has roughly 5m retail customers and growing.
M&G’s share price rose 2% after the Budget. I think it’s well placed to capitalise on rising broader demand for financial planning services and products.
I think it will deliver healthy long term growth, even though it faces fierce competition.
