Listed pub groups including Mitchells & Butlers PLC (LSE:MAB) and JD Wetherspoon PLC (LSE:JDW) could see a mid-single-digit boost to profit from the government's 20% business rates cut, according to City analysts.
Downing Street said the measure will save the average pub around £1,100 next year and benefit nearly 32,000 pubs, clubs and live music venues in England.
Its £100 million annual cost will be partly funded through higher charges on online warehouses and a review of reliefs for businesses such as vape shops.
Panmure Liberum analyst Anna Barnfather said Mitchells & Butlers and Wetherspoon were likely to be the largest winners because of their extensive English estates and relatively high rates bills.
Mitchells & Butlers previously had estimated annual exposure of around £100 million, while Wetherspoon disclosed a bill of approximately £42 million, she said.
Fuller Smith & Turner PLC (AIM:FSTA), Marston’s PLC (LSE:MARS), Young & Co (AIM:YNGA) and Shepherd Neame (AQSE:SHEP) should also benefit, Barnfather added, potentially delivering meaningful gains relative to their smaller profit bases.
The policy is "clearly positive for sector sentiment and medium-term earnings risk", the analyst said, although eligibility thresholds, caps and the treatment of higher-value properties remain unclear.
As for the effect on the wider economy, Barclays economist Jack Meaning said the measure would have "no discernible impact on inflation". Even if the entire saving was passed on to customers, it would lower headline inflation by only 1-3 basis points.
The British Chambers of Commerce welcomed the support but warned that other hospitality businesses such as hotels still faced an "existential threat", calling for wider reform.
Research from the business group found more than a third of firms believe business rates are of more concern now than they were three months ago.
"This anxiety is felt more sharply in some sectors, with more than half of hospitality business, and two fifths of manufacturers and transport firms fearing the worst," said BCC policy director Kate Shoesmith.
"Any action on rates is long overdue and very welcome, but root and branch reform of the system was a Labour manifesto commitment, and it is time to deliver on that promise."
