Unchanged interest rate hits farmers
By FWi staff
THE Bank of England has left interest rates unchanged at 6%, in a move which is unlikely to have any downward effect on the strength of Sterling.
The banks Monetary Policy Committee voted to leave the rate unchanged at its monthly meeting on Thursday (6 April).
Its decision comes a day after the National Farmers Union warned that farmers could be driven out of business by the strong Pound.
Peter King, NFU economist, said agriculture was in its fifth year of recession despite a boom which has seen other sectors of the economy grow at 2.5%.
“The over-valued Pound will cause the closure of businesses which would otherwise have been viable in the long-term,” he said.
Farmers are badly hit because many farm subsidies are set in Euros and the strong Pound, which is worth 1.64, makes exports less competitive.
Sterlings strength reduces support prices when they are converted from Pounds to Euros. Processors often pass the losses back to farmers.