Russell Lynch: We could all pay price for London's business rate pain

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IT’S hard to think of a bigger act of vandalism on the London economy than the egregious rise in business rates looming over retailers and office tenants from next year. The revaluation of rates to reflect 2015 rents from next April — in effect punishing London for its resilience after the crash — has been a torpedo scything through the water towards the capital’s hull for months.

How are the capital’s biggest retailers expected to react when they learn that their increases have been “capped” at a ridiculous 45%? On Bond Street for example, business rates are doubling. That comes on top of the additional costs such as April’s National Living Wage. The New West End Company has rightly called it “catastrophic”. Around 8,800 “large” ratepayers, most in London, will be hit; but large is defined as a property with a rateable value of more than £100,000, or, according to experts, a standard shop unit in Marylebone High Street. And all at a time when the business climate is more uncertain than ever. Squeezed tenants also mean falling property prices.

Sympathy elsewhere in the UK, where business rates are largely going down, may be limited over this redistribution of wealth from Mayfair to Middlesbrough. But the transition to the new regime mean shops and offices in more deprived areas won’t see their own bills fall as quickly as they’d like. And soaking the engine room of the UK economy for yet more tax will do more widespread damage in the longer term.

Cartel’s conundrum

The scrum of lobbyists, analysts and hacks that surround Opec meetings is so savage that it’s known as the “gang bang”. But few of those sharp-elbowed experts predicted the surprise production cut — the first in eight years —tentatively agreed by the oil cartel late last night.

Drivers will be wincing at the suggestions from Platts that the cut of 700,000 barrel a day could put $12 on barrel of oil next year, with the pound’s fall against the dollar since Brexit giving an extra twist of the knife.

Beleaguered motorists should take some cheer, however. The deal still has to be ratified by Opec in November, which can be like herding cats.

Post-sanctions Iran wants to raise production, and outside the cartel, recession-struck Russia has its own agenda.

Above all, this once almighty cartel now accounts for well under half of global production; the Saudis will be aware that letting the price creep much above $50 will let back in the shale producers they’re determined to crush. Filling up may cost a few pence a litre more next year, but the days of $100 oil are well and truly gone.

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September 29, 2016 |
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