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.

Below are some good investment ideas, provided Rachel Reeves delivers after her Spring Statement
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.


Our team of Wealth experts believe investors should look into more established defence companies
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 period). This is due to contract delays in both the US and UK.
But Susannah Streeter, head of money and markets at investing firm Hargreaves Lansdown, believes QinetiQ could be a beneficiary of the Government’s big defence spending push announced last Wednesday. ‘Its specialisms in advanced materials, cyber capabilities and analytics are all defence areas Labour wants to focus on,’ she says.
‘Current contract delays could cause a £30 million hit to its bottom line this year.
‘Investors may have to put up with volatile trading for some time to go – although its share price (just below £4) looks like an attractive entry point.’
Other defence stocks that our experts like include Chemring Group (a provider of components used in missile systems), aerospace manufacturing company Melrose Industries and engines giant Rolls-Royce Holdings.
One defence stock off the radar of many investors is SRT Marine Systems, a constituent of the FTSE AIM All-Share Index.
Seven’s Kumar says the company, which specialises in the development of marine identification technology to spot ships and submarines, ‘is the kind of UK business which could boom with a bit of MoD money’.
He adds: ‘It would need a real commitment from the Government to rebuild the Navy, but that does feel like a direction the UK should explore. The company’s market capitalisation is tiny [£115 million, compared to Babcock’s £3.7 billion] and it’s super high-risk from an investor point of view. But it could be a fun investment – and a patriotic one at that.’
One slightly leftfield defence stock pick comes from Hargreaves’ Streeter.
She believes catering group Compass could benefit from the anticipated upswing in defence spending – it currently supports more than 250 military establishments across the UK. ‘If the size of the Armed Forces is boosted, there will be more hungry mouths to feed in bases both here in the UK and overseas,’ she says.
Compass is also part of the FTSE100 – with its defence catering arm only representing a small part of its global operations.
For investors who prefer to invest in a fund, WisdomTree launched the first European Defence exchange traded fund on the London Stock Exchange earlier this month. Among its UK holdings are BAE Systems, Melrose Industries and Rolls-Royce Holdings.
These sit alongside holdings in German defence giant Rheinmetall and Italian aerospace company Leonardo S.p.A which employs 8,500 workers in the UK.
The fund’s ongoing annual charge is 0.4 per cent.
Other defence-oriented exchange traded funds have broad international exposure. For example, HANetf Future of Defence includes Rheinmetall and BAE Systems among its top ten holdings, sitting alongside stakes in US companies such as Cisco Systems and Palantir Technologies. The fund’s total annual charges are 0.49 per cent.
First Trust Index Global Aerospace & Defence has BAE Systems and Rolls-Royce in its top ten holdings. Annual fund charges are 0.65 per cent.
A HOUSEBUILDING BOOM
Not all our experts are convinced by the Government’s story that we are on the cusp of a housebuilding boom.
Evelyn’s Hollands says there are numerous gusty headwinds that could get in the way. These include a shortage of tradesmen, stubbornly high building material costs, higher for longer interest rates – and a weak economy undermining demand for new houses.
‘We need a reality check here,’ he adds. ‘When it came into power, Labour pledged 1.5 million new homes would be built during this parliament.
‘Last Wednesday, official forecasts from the Independent Office for Budget Responsibility said that target would not be met, forecasting net builds of 1.3 million.’
He says the current depressed share prices of major housebuilders indicate that the market isn’t convinced about the boom that the Chancellor is talking about.
Over the past year, building firms’ shares have fallen, with Persimmon down by 9 per cent, Barratt Redrow 11 per cent, Taylor Wimpey 23 per cent and Vistry 53 per cent.

Not all our experts are convinced by the Government’s story that we are on the cusp of a housebuilding boom
Not everyone is so downbeat. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, says Persimmon has built solid foundations for growth this year.
With its houses being priced at more than 20 per cent below the national average, demand should hold up well.
He says it represents a ‘strong pick for investors looking to gain exposure to the sector’.
Other analysts prefer to look outside the big housebuilders.
AJ Bell’s Coatsworth likes Nexus Infrastructure, a company which he says is a ‘key cog in the engine to get the UK building’. It is listed on the FTSE AIM All-Share Index.
He adds: ‘It owns Tamdown which helps prepare sites for new housing estates – putting in foundations and plot drainage and connections to existing infrastructure such as roads and sewers.’
Like Coatsworth, Seven’s Kumar also prefers a number of property related FTSE AIM All-Share companies, although he says they are high risk investments (not for the faint hearted).
They include Brickability (leading supplier of bricks in the UK), HSS Hire Group (which provides tools and equipment for hire) and Mortgage Advice Bureau, a mortgage specialist which Kumar describes as the ‘Ronseal’ of AIM stocks – ‘does exactly what it says on the tin’.
For those who prefer exposure via funds, eToro’s Lale Akoner likes iShares UK Property. This exchange traded fund has exposure to UK residential and commercial property developers.
Some good investment ideas, provided Rachel from Accounts delivers.
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