The shares YOU need to buy to escape Rachel Reeves’ economic doom: personal

Searching for glimmers of hope in Wednesday’s Spring Statement is a bit like searching for a needle in a haystack. As Private Frazer was prone to saying in the BBC’s glorious 1960’s sitcom Dad’s Army: ‘We’re doomed.’

Maybe we are if Vladimir Putin isn’t reined in pretty sharpish by a vacillating President Trump. And maybe we are doomed economically, as a mix of toxic taxes, socialism and nimbyism take their toll over the next four years, curbing entrepreneurship and investment in our ever-shrinking industrial base.

Yet, while some readers may accuse me of clutching at straws, there were a few themes that came out of Wednesday’s statement which could save the nation from the proverbial knacker’s yard.

First, a bit more spending on defence to keep Putin at bay: an extra £2.2 billion in the year ahead and a pledge to lift the defence budget from 2.3 per cent of Gross Domestic Product to 2.5 per cent from April 2027.

And secondly, aided by the removal of planning hurdles, a boost to housebuilding which if all goes to plan could result in 305,000 new homes being built annually by 2029.

To repeat Sir Keir Starmer’s comment this February, in reference to plans to construct more mini nuclear reactors: ‘Build baby build’.

If these themes come through, they will provide a boost to communities across the country – and create new jobs, although skill shortages may put a spanner in the works.

They will also provide investment opportunities for astute investors – as companies in these sectors thrive from a business boom.

In the wake of the Spring Statement, Wealth asked some of the country’s top investment experts to identify companies that could benefit from these growth themes – and result in rising share prices. Their picks do include some better known UK companies.

But they also embrace smaller firms that are currently listed on the FTSE AIM (Alternative Investment Market) All-Share Index – which many investors may not have heard about before. Their selections also include stocks besides defence companies and housebuilders.

For example, in the case of defence, a company that provides catering services to the military.

And with regards to housebuilding, a mortgage adviser which should benefit from a surge in loan applications from new home buyers.

As ever, these ideas are not to be taken as recommendations – and they should only be part of a well-diversified portfolio.

DEFENCE

Although a key part of the Government’s defence spending strategy is to attract new start-up businesses in emerging technologies, such as drones and AI controlled systems, our team of Wealth experts believe investors should look into more established defence companies.

‘Changes to the Ministry of Defence’s (MoD) procurement system should enable more smaller firms to compete for government contracts in the future,’ says Jason Hollands of wealth manager Evelyn Partners. ‘But many of them will be private companies and therefore hard to invest in.’

It’s a view shared by Ben Kumar, head of equity strategy at Seven Investment Management. He believes a better strategy is to look at companies such as Babcock International (part of the FTSE100) and QinetiQ (FTSE250).

Earlier this week, Babcock, best known for maintaining the UK’s fleet of submarines, received a £1 billion boost after winning a five-year contract from the MoD to maintain military equipment for the Army.

Chief executive David Lockwood said: ‘In a period of increased global instability, more is being expected of our Armed Forces. This contract extension ensures that Babcock continues to provide the British Army with the tools to do its job.’

Dan Coatsworth, analyst at investing firm AJ Bell, says the government’s plan to increase defence spending should create more opportunities for the contractor.

Having, earlier this year, upgraded its revenue expectations for the financial year to the end of this month, Coatsworth says Babcock ‘looks to be on a roll with contract wins in the UK and overseas’.

He adds: ‘There is a risk that the stock market rally across the defence sector runs out of steam and investors take profits following a good run.

‘But in Babcock’s favour is the fact its shares aren’t expensive, even after a strong run this year.’

Shares in QinetiQ, which supplies everything from advanced naval control systems to cyber security and bomb disarming robots, have performed poorly in recent months. They are down 3 per cent over the past three months (by way of contrast, Babcock’s shares are up 49 per cent over the same…