25 July, 2019
The Lord Chancellor has announced that the new Discount Rate will be set at minus 0.25% and will take effect from 5 August 2019. It is disappointing news for Compensators; although damages claims will be reduced, the savings fall far below those that would have been achieved had a change back to a positive rate been effected, as hoped.
Parties must now consider the impact the change may have on any existing cases. In particular, the following action should be taken:
It is fair to say that a 0.5% change in the discount rate will have a fairly negligible effect on all but the higher value claims, but we should still be mindful of the impact on all cases. An example of the potential effects of the change is set out below for illustrative purposes.
|At -0.75%||At -0.25%|
|Age at date of trial:||22||22|
|Ogden Multiplier from Table 11 (at -0.75%):||55.53||49.10|
There are likely to be hefty care, accommodation and other future loss claims in such cases, so the cumulative savings from the recalculations could be substantial.