CBI survey highlights urgent need for business rates reform to unlock UK investment and improve economic competitiveness

CBI survey highlights urgent need for business rates reform to unlock UK investment and improve economic competitiveness

(IN BRIEF) A CBI survey of nearly 700 UK businesses has found that the current business rates system is significantly restricting investment, productivity, and growth. Around one-third of respondents reported cancelling or delaying property investments due to high costs and uncertainty, while many highlighted the system’s complexity and unpredictability as major concerns. The UK’s property tax burden remains among the highest in the OECD, further impacting competitiveness. The CBI argues that reducing business rates could lead to substantial reinvestment in areas such as automation, infrastructure, and workforce development. To address these challenges, the organisation is calling for comprehensive reform focused on reducing costs, increasing transparency, and supporting long-term investment and economic growth.

(PRESS RELEASE) LONDON, 27-Apr-2026 — /EuropaWire/ — A new survey conducted by the Confederation of British Industry (CBI) has highlighted growing concerns among UK businesses that the current business rates system is significantly hindering investment, productivity, and overall economic performance.

Drawing on responses from nearly 700 companies across the country, the findings reveal that the structure and cost of business rates are discouraging firms from committing to property-related investments. Around 32% of respondents indicated that the system has directly contributed to decisions to cancel, delay, or scale back planned investments.

Among those affected, a large majority pointed to rising costs as a primary issue, with 76% stating that higher business rates bills limit their ability to invest. In addition, 53% reported that uncertainty surrounding future liabilities makes long-term planning more difficult, while 22% said that the removal of rate reliefs has had a direct impact on their investment strategies.

The survey also suggests that reducing the burden of business rates could unlock significant reinvestment. Approximately 30% of businesses said they would reinvest between 91% and 100% of any savings, prioritising areas such as productivity improvements, automation and artificial intelligence, property upgrades, and workforce expansion.

Real-world examples included in the findings illustrate the scale of the challenge. One airport operator anticipates a 112% increase in its business rates bill by the 2028–29 period following the end of transitional relief, making it its largest non-labour expense. Meanwhile, an infrastructure company facing a 200% rise in its rateable value has halted substantial rail investment plans.

The report also underscores the UK’s relatively high property tax burden, noting that it remains the highest in the OECD, with property taxes accounting for a share of GDP significantly higher than in countries such as Germany. Businesses cited the system’s complexity, unpredictability, and abrupt threshold changes as factors that undermine confidence and deter investment.

In response to these findings, the CBI is calling on both national and devolved governments to undertake comprehensive reform of the business rates framework. The organisation argues that the current system increases both the cost and risk of investment, often penalising improvements by raising rates following property upgrades or expansions. Unlike other operational expenses, business rates are largely fixed and offer limited flexibility for mitigation.

Louise Hellem, Chief Economist at the CBI, emphasised that business rates have evolved beyond a standard operating cost into a significant barrier to growth. She highlighted that even minor changes in property valuation can lead to disproportionate increases in tax liability, creating uncertainty that discourages investment and slows economic progress.

The CBI is advocating for reforms based on three key principles. First, it calls for the removal of the revenue neutrality constraint to ensure that reforms deliver genuine financial relief rather than redistributing costs between sectors. Second, it stresses the need for greater predictability and transparency through more stable multipliers and improved valuation processes. Finally, it recommends measures to actively support investment and growth, including the elimination of abrupt tax thresholds, enhanced reliefs for property improvements, and incentives for environmentally sustainable upgrades.

The organisation concludes that meaningful reform of the business rates system could unlock higher levels of private investment, improve productivity, and align the UK more closely with international competitors, ultimately supporting long-term economic growth.

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SOURCE: CBI