CBRE Responds To The Chancellor's Autumn Statement
London, December 2012 – CBRE has responded to the measures outlined in the Chancellor's Autumn Statement.
Dr Neil Blake, Head of UK and EMEA Research, CBRE commented:
“Much of the downgrading of GDP estimates for 2012 and the on-going weakness of UK economic forecasts reflect the parlous state of private sector construction. The problems of private sector house building are well known but commercial and industrial construction has actually been responsible for a far bigger share of the fall in UK GDP since the start of the recession. Almost 50% of the loss in UK economic output since the beginning of 2008 can be attributed to a drop in private construction activity.
“It is to be hoped that the Chancellor’s optimism for future business investment is reflected in an upturn in commercial and industrial construction work and that policies can be introduced to kickstart construction to assist recovery. Clearly, anything that simplifies and speeds up the planning process helps, and policies that assist the financing of the sector would be a positive move. If it does not, the construction sector will continue to act as a major drag on the economy for some time.”
On the impact to the retail industry - "It is imperative that the government reconsiders the planned inflation-linked increase in business rates."
Jonathan De Mello, Head of Retail Consultancy, CBRE, commented:
“The government definitely needs to review its earlier decision to postpone business rate re-evaluation to 2017. Given that we have seen a level of retailer administrations and store closures this year - and consequent job losses - unmatched since 2008, this decision is a mistake.
“Pre-2008 business rates are not relevant in today’s market where rents have fallen across the UK bar central London and the best major regional shopping centres. The deferral of re-evaluation to 2017 will only serve to perpetuate the inequities that currently exist in the retail sector, and will lead to more administrations and ever-increasing retail vacancy levels in 2013 and beyond.
“Given how far rents have dropped in the UK's more challenged high streets business rates in some locations , can be higher than rents. It is absurd that the government makes more money out of a property than the owner of the property themselves.
“If the government does not want to consider going back on its earlier decision, one measure that should definitely happen is not increasing business rates in line with inflation until the 2017 re-evaluation. This would not fully stem the rise of administrations we have seen, but would certainly slow it down.”