Union regrets loan rate rise
Union regrets loan rate rise
LABOURS decision to increase the interest rate by 0.25% this week will have a negative impact on farm incomes, warns the NFU.
Sir David Naish, NFU president, said higher interest rates would lead to direct increases in farm costs through a rise in the cost of borrowing. And the rise would have a greater impact by maintaining the strong exchange rate.
"British agriculture is already suffering along with many other business sectors because of the strength of sterling, which makes our exports more expensive on world markets and pushes down the prices received by farmers.
"The NFU wants to see a stable business environment and steady growth with low inflation. We would therefore be looking to discuss with government how, if necessary, other fiscal measures might be used in preference to raising rates," he added.
Richard Livsey (Lib Dem, Brecon and Radnor) said the rise in interest rates would hit Welsh lamb exports, which were already struggling in the wake of a strengthening sterling. And he warned that it could lead to more EU beef exports entering Welsh markets.
In Scotland the rise is expected to add £2.25m to farm sector borrowing and bankers forecast further small increases over the next months rather than any sharp hike.