By FWi staff

ON the eve of the European Union summit that will finalise the terms for European Monetary Union, agricultural economists warned that the Single Currency could reduce direct subsidy payments to UK farmers.

EMU will mean that existing agrimonetary arrangements will be abolished – there will be no need for them among the 11 EU member states who join the Single Currency. The rule which has limited any Green Pound revaluation to a maximum of 11.5% will also be abolished.

UK farmers can therefore expect direct aid payments for the 1999/2000 to be lower than this year – possibly by as much as 11.5%, says Graham Young of Banks Agriculture.

Thats unless the EU Commission comes up with a new system of agrimonetary arrangements before the Single Currency is introduced on 1 January, 1999.