Skip to main content
  • rainbow over text: 'thank you NHS'
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Budget 2020 – what could it mean for the UK stock market?

Senior Equity Analyst Nicholas Hyett has a look at the latest Budget rumours and what they might mean for UK companies.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The run up to a Budget is always full of rumours about what the chancellor has in store.

We’ve looked at the likely increase in infrastructure spending in a previous article, but what might 11 March hold for other parts of the stock market?

The information in this article is provided for your interest but is not personal advice. If unsure, please seek advice.

Extra spending

The noises coming out of the Treasury suggest the government is seriously looking at a significant increase in everyday spending. However whether that’s funded by new taxes or increased government borrowing remains to be seen.

If well executed, increased government spending has the potential to boost the economy – increasing the pounds in people’s pockets and encouraging spending. No doubt the government is hoping for just that effect – which would also bode well for UK focused retailers, financial services and construction groups.

Economies are complicated things though, and the effectiveness of so-called fiscal stimulus programmes can vary.

Business rates

Business rates are a tax on property used for business purposes, and retailers have argued that the current system gives online competitors an unfair advantage.

The government has already announced plans to change business rates, and details will be closely scrutinised by the UK’s retailers.

An online retailer might only have one warehouse across the whole country, so they only pay one set of business rates. By comparison traditional bricks & mortar retailers have to pay rates on every store.

Changes could provide a significant boost to the retailers – with Tesco, for example, paying £700m in business rates every year. Rate relief looks like it’ll be extended to include music venues and cinemas too.


Housing remains a key focus for the government. But with Help to Buy coming to an end in 2023, housebuilders look unlikely to benefit in the same way they have in the past.

Rumoured or announced reforms include funding for 300,000 homes a year by the mid-2020s, shifting stamp duty from buyers to sellers and tax breaks for landlords who sell to long sitting tenants.

Given the government’s twin aims of more house building and stable to lower house prices, we tend to prefer construction materials to housebuilders as a way to play this trend. As long as houses get built, brick makers and builders’ merchants get paid. The actual price of houses matters more for housebuilder margins.


Boris Johnson has made some pretty strong comments about his intention to focus on climate change, including a pledge to hit net zero by 2050. It should come as no surprise that the environment is expected to feature quite highly in the Budget.

Initiatives under consideration include investment in Carbon Capture & Storage (CCS) as well as improved energy efficiency and stricter timelines on banning petrol and diesel cars. However, investing in these trends is difficult.

Renewable energy, electric cars and CCS are global industries. It’s possible to invest in companies like wind turbine manufacturer Vestas, and electric car manufacturer Tesla. But relatively minor changes in UK policy are unlikely to move the dial for these global giants.

Smaller renewable companies are often not listed or part of much larger groups in traditional energy industries. Both BP and Shell have renewable energy businesses for example, but changes of renewable policy are unlikely to move their share prices for the better.

Having said that, the UK stock market does have some investment trusts that invest in companies focused on renewable energy. Jon Curtis recently took a look at the sector for those who are interested in a more diversified way to invest.

Please remember that all investments rise and fall in value, so you could get back less than you invest.

Read more of our 2020 Budget coverage

All our latest expert comment in one place.

Budget 2020

Editor’s choice: our weekly email

Sign up to receive the week’s top investment stories from Hargreaves Lansdown

Please correct the following errors before you continue:

    Existing client? Please log in to your account to automatically fill in the details below.


    Your postcode ends:

    Not your postcode? Enter your full address.


    Hargreaves Lansdown PLC group companies will usually send you further information by post and/or email about our products and services. If you would prefer not to receive this, please do let us know. We will not sell or trade your personal data.

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    Editor's choice – our weekly email

    Sign up to receive the week's top investment stories from Hargreaves Lansdown. Including:

    • Latest comment on economies and markets
    • Expert investment research
    • Financial planning tips
    Sign up

    Related articles

    Category: Markets

    Is this stock market crash different?

    We look for objective facts we can learn from past market falls.

    Nadeem Umar

    07 Apr 2020 5 min read

    Category: Investing and saving

    5 tips to navigate market storms

    We give you our top five investment tips to help you steer through this market storm.

    Nadeem Umar

    09 Apr 2020 5 min read

    Category: Markets

    Stock Market drops – lessons from history

    While the causes have been different, we've seen markets move like this before. We take a look at what's happened in the past.

    Emilie Stevens, Equity Analyst

    17 Mar 2020 6 min read

    Category: Shares

    Next week on the stock market

    What to expect from a selection of FTSE 100, FTSE 250 and selected overseas shares reporting next week.

    Sophie Lund-Yates

    29 May 2020 5 min read