According to the governor of the Bank of England, Mark Carney, business rates are currently a “real issue” throughout the UK. His comments come amid questioning by the Treasury Select Committee over the impact of tax on business buildings and whether this was affecting their operation.
Carney’s response to the Committee acknowledged that it was a serious issue and one that was being discussed at roundtables all over the country. Indeed 2018 has already seen the closure or reduction in numbers of many big high street name stores including Toy R Us, Mothercare, Carpetright, Homebase and the restaurant chain Jamie’s Italian. Marks and Spencer are also planning to close up to 14 outlets this year.
As well as the issue of business rates being blamed for poor performance, the fact that wage growth has been limited in recent years as well as being less than the inflation rate could also be responsible for these closures. Speaking about the recent events in retail Carney noted the nature of the retail industry and that this could provide a reason why such events had occurred as well. He stated: “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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