Strong £s effect
GOVERNOR of the Bank of England Eddie George has been told that the strong £ is likely to wipe £2bn off the farm gate value of UK agricultural production in the coming year.
At a meeting on Tuesday, NFU president Sir David Naish told Mr George that the strength of sterling had triggered four green £ revaluations already this year.
While a strong £ made exports less competitive for all UK businesses, farmers had been further hit by a green £-related cut in EU support prices. Farm prices had plummeted by up to 30% in the past year and were continuing to fall.
Farm incomes looked likely to plunge dramatically this year, and investment was in sharp decline, Sir David told Mr George. Investment was essential to maintain the countryside.
He added that he was sure that Mr George understood the overall message. But the governor stressed the need to keep inflation under control. That is done by raising interest rates, which has the unwanted side-effect of strengthening sterling. *