BoE Mark Carney: Business rates have become a “real issue”

Mark Carney business rates

The governor of the Bank of England has gone on the record to say that business rates have become a “real issue” across the country.

Mark Carney made the statement after he was questioned by the Treasury Select Committee on whether the controversial tax on business properties was having an effect on businesses.

“The short answer is yes – yes, it’s a real issue,” Carney told the MPs on the committee.

“It’s one of those issues that is guaranteed to come up in every visit to business regional roundtable(s).”

His comments come amid a challenging period for the high street, with a string of household names this year either collapsing or announcing major restructures and store closures in order to stay afloat.

Consumer spending habits have also been impacted by slow wage growth, which has lagged behind the rate of inflation.

Carney said: “We should start by acknowledging that this country has the most competitive and in many respects the most innovative retail sectors in the world and part of the consequence of that is… consumers are well served, margins in the sector are very tight, and births and deaths of firms – even historic names – are frequent.”

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  1. Many high street retailers rent their stores from commercial landlords who include an annual rent review increase-only in their contracts.
    Retailers can no longer afford to accommodate these contracts as there is constant downward pressure on the prices of their goods and services.
    So commercial landlords, many of them owned by pension funds, will be forced to review their rents downwards for the foreseeable future. If they don’t, the retailers will walk away from their leases using insolvency laws which is already happening.
    Deflation is coming back with a vengeance because we haven’t allowed the necessary market correction needed to stabilise realistic property and asset prices.


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