The UK’s business rates system is acting as a major brake on investment, productivity and economic growth, warns the Confederation of British Industry (CBI).

Almost a third of the 700 firms surveyed said that the system has played a significant role in cancelling, reducing or delaying planned investment in their property.

The CBI says that for the second consecutive year, the UK has the highest property tax levels in the OECD, with property tax as a share of GDP four times higher than Germany.

Businesses say that the level of their business rates bills and the system’s unpredictability, complexity and ‘cliff edges’ are undermining confidence and deterring investment, it adds.

The CBI is urging governments at a national and devolved level to deliver fundamental reform to boost competitiveness and support long-term investment across the UK.

Louise Hellem, Chief Economist at the CBI, said:

‘Business rates are no longer just a cost of doing business – they’re a major tax on ambition and one that effectively penalises investment.

When a single refurbishment can trigger a 40% increase in rateable value, or a £1 change can move a firm from one band to another and add £39,000 to their bill, the system is clearly not fit for purpose in a competitive, modern economy. Reform of the business rates system is no longer a ‘nice to do’, it’s an economic necessity.’

Internet link: CBI website