Pressure on farm borrowings could ease slightly as a further cut in interest rates looks increasingly likely.

Hopes of a cut have been raised after Chancellor Alistair Darling cast aside the fiscal rulebook and gave the Bank of England free rein to cut rates without fear of breaching its inflation target.

The US Federal Reserve has already slashed its base rates by 0.5% to 1% in a further attempt to ward off deep recession.

The Bank of England’s Monetary Policy Committee is now widely expected to announce a further cut in the UK base rate when it meets next week.

Although the bank has historically been wary of cutting rates to avoid adding to inflationary pressure, Consumer Price Index inflation – the government’s target measure – now stands at 5.2% and economists warn it could remain high for months.

Technically, the Bank’s remit is to keep inflation within a target of 2% in the medium term.

But Mr Darling has signalled the bank has “discretion” over the time it takes to meet this target and “can support, in line with its statutory requirement, the government’s wider economic objectives”.

Mr Darling also announced plans to effectively scrap fiscal rules put in place when Gordon Brown became Chancellor in 1997, but attempted to offer reassurance, adding: “The way we meet our fiscal targets may change – but the principles underpinning fiscal policy will not.”