Panmure Liberum has identified several infrastructure firms that could either benefit or lose out if rumoured policies ahead of Chancellor Rachel Reeves’ October Budget materialise.
Among the potential winners, Costain Group PLC (LSE:COST) may secure up to £1 billion if HS2 is extended to Euston, a project supported by Secretary of State for Transport Louise Haigh.
Haigh recently stated it would make “absolutely no sense” for the high-speed route to end at Old Oak Common, as speculated given the gargantuan cost overruns associated with the project.
Balfour Beatty, which was awarded a £1.2 billion contract for the £9 billion Lower Thames Crossing, could be hit by delays to the project.
Currently Britain’s largest road project, Lower Thames Crossing’s future faces uncertainty after ministers delayed a decision on whether it should go ahead or not by seven months.
Haigh said the delay will “allow more time for the application to be considered further”, while Reeves is reportedly fielding cost-saving proposals for the £9 billion Essex-to-Kent road tunnel.
Panmure added that Balfour Beatty plc (LSE:BBY) remains involved in the £4 billion Net Zero Teesside project, alongside Costain, which could provide some positive momentum.
The cancellation of the A303 Stonehenge Tunnel and A27 Arundel Bypass has negatively impacted Costain, which had been involved in both projects.
Meanwhile, the acceleration of Ministry of Justice prison construction could create opportunities for Kier Group PLC (LSE:KIE), Galliford, and Morgan Sindall, especially as ISG has exited the market, said analysts.
Additionally, Panmure sees government backing for civil nuclear and Small Modular Reactors as a positive sign for Balfour Beatty, Costain, Kier, and Babcock.
Regulatory spending in the energy and water sectors could also benefit Costain, Galliford Try Holdings PLC (LSE:GFRD), and Kier.
Panmure remains optimistic about the infrastructure sector in general, “given that it seems that Rachel Reeves is considering different approaches to give herself more headroom for capital investment, and noting recent strength in the PMI”.