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Analysts forecast a reduction in pace of business rate growth

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The high street is heading for a business rates reprieve after five years of painfully high increases, which forced many shops to close.

Business rates have risen by 20 per cent since 2011 taking the total expected this year to £28 billion.

However, analysts at consultancy Capital Economics predict that September’s Retail Prices Index measure of inflation, to which annual business rate rises are pegged, will rise by just 0.7 per cent compared with 2.3 per cent in September last year. That would raise the total take of the property-based tax by less than £200million across all business sectors.

It would also mean the increase for the retail sector, which has long campaigned for an overhaul of the system and argued that shops are unfairly burdened, would be in the region of £50million – less than a third of the annual rises of the past two years.

But business rates campaigner Paul Turner-Mitchell warned that small shops, which have suffered disproportionately from the rises, could still be hit hard because temporary business rate relief worth an estimated £284million is due to end next year.

Referring to the fall in inflation, Samuel Tombs, senior UK economist at Capital Economics, said:
‘Supermarket competition should drive petrol prices down before long and British Gas will cut its gas prices by 5 per cent in late August with other utility companies likely to follow suit.’

Jamie Winter, services director at supermarket Morrisons, predicted last week that diesel may ‘break below the £1 landmark’.

The expected slowdown this autumn from an average RPI growth rate of 1 per cent so far this year is likely to persuade the Bank of England to keep rates on hold.

Source : Neil Craven and Alex Hawkes - Financial Mail on Sunday
www.dailymail.co.uk/money/news/article-3199354/Relief-shops-surge-business-rates-set-slow.html

17 August 2015

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