The wait is over: the new discount rate has arrived
In February 2017, the then Lord Chancellor surprised everyone by reducing the Discount Rate (DR) from 2.5% to -0.75%. After protests, but following a lengthy pause, in March 2018, the Civil Liability Bill was introduced into the House of Lords to kick-off a review of the DR and back then a figure was hinted at between 0% and +1%. That Bill became law in December 2018 and the formal review process finally commenced in March 2019.
So, after a wait of almost two and a half years we now have a new DR: -0.25%. This will come into effect on 5 August 2019.
Against popular expectation the new rate remains in negative territory and mirrors that likely to be adopted in Scotland this summer.
Many will rue a missed opportunity to bring multipliers into line, reflecting real life investment returns although the impact of Brexit may well still throw in a curveball.
Defendants will feel disappointed and underwhelmed by this adjustment and the impact that it will have immediately on the value of claims, including the fact that, once again, the new discount rate does not have a specific table. However, with the Ogden Working Party due to meet at the end of this month a new -0.25% table will presumably be published before 5th August.
Repercussions of a continued negative discount rate include the need for the courts to revisit the methodology of accommodation claims – an issue that has been fudged during the last couple of years.