THE ULSTER Farmers‘ Union says it will be writing to the governor of the Bank of England to express concern at rising interest rates and their effect on farming.
Reacting to last week‘s (w/e June 11) 0.25% rise in interest rates – the fourth since November – which brought the base rate to 4.5%, the union said it feared the impact on agriculture was being overlooked by the bank‘s Monetary Policy Committee, which was focusing on reining in rising house prices and inflation.
Graham Furey, deputy president of the UFU, said: “Every quarter per cent increase adds £1.25m annually to the cost of borrowing for the local farming industry [in Northern Ireland].
“If rates continue to rise, they will have an increasingly detrimental effect on farm businesses.”
But the effects of rate rises went further than just increasing the cost of servicing debt, said Mr Furey.
“The Euro is worth less than it was in June last year. If the increase in interest rates leads to a further strengthening of Sterling against the Euro, we will see lower arable area payments this winter.
“This is the type of negative outcome we will be drawing to the attention of the bank‘s Monetary Policy Committee.”