The economy continues to feel post Brexit aftershocks. It is likely to do so for some time – particularly as the timetable for actually leaving the EU, and in fact what form it might take, is by no means set. As consumer confidence dips and the commercial property market slows down, what are the implications for future business rate rises?
The Influence of Brexit Uncertainty
Recent reports suggest that the persistent sense of uncertainty in the UK following the June 23 referendum on EU membership is now bleeding out into the economy.
Market research by GfK has recorded the biggest slide in consumer confidence for 21 years, with many respondents expecting the economic situation to get worse in the next 12 months, including price increases.
“Consumer confidence is a crucial indicator”, comments Paul Giness, of Manchester-based Chartered Surveyors, The Beattie Partnership. “It can have very real implications for businesses in the commercial and retail sectors”.
Commercial landlord Great Portland Estates also reports that there are the beginnings of a slow down in the commercial property market. This reflects a lack of confidence on the part of investors. This is the likely result of Brexit, being that some investors defer making important decisions until the UK’s trade negotiations with the EU have at least commenced.
“Against this is the background of a full business rates revaluation“, continues Paul. “Scheduled for 2017, it will be based on information as at April 2015, before the economic effects of Brexit have even begun to be felt”.
Inactivity or Action?
Leading figures from the UK’s retail industry are renewing calls for the Government to look at the current business rates system with a view to revising it. With business rates already set to increase by some £400m this year, before any revaluation, the feeling is that in uncertain times, action is required to encourage competitiveness and cushion against the effects of any downturn.
“Businesses facing rates increases might be hoping for more generous transitional rates arrangements once the Government publishes the regulations later this summer. Or will this be delayed further by Brexit?” Paul comments.
However, the Government might get more freedom to provide business incentives as many of the previous rates reliefs are subject to current EU de minimis state aid limits, which will presumably go. But this won’t offer any kind of immediate relief.
There are various other measures that the Government might introduce to encourage businesses. These include extending enterprise zones but, as yet, it is still a case of wait and see. Councils also have increasing powers to boost areas requiring regeneration following announcements by the Chancellor.
“It’s still important for businesses to look at their rates, and rateable values, to be sure that they’re only paying what they should,” Paul concludes.
To discover if you are paying the right amount of rates – or ways of reducing them – please call The Beattie Partnership on 0161 228 2224 or visit bepart.co.uk