Bank of England cuts cost of borrowing

BORROWING COSTS are set to fall after the Bank of England’s Monetary Policy Committee today voted to cut the base rate by 0.25% to 4.5%.

The decision was influenced by lower UK growth in the first half of the year, reduced consumer spending and slower business investment.

Although inflation hit the 2% target in June, the committee expected that to fall and decided to implement the cut to keep inflation on track.

The decision – the first time interest rates have moved in a year – had been widely expected.

Tim Porter, agriculture director at Lloyds TSB Business Banking, said: “This widely tipped reduction in interest rates will be welcome news for farmers, particularly against the background of the potential cash flow problems they are facing with the expected delay of single payments.

“The reduction has come at a time when commodity prices remain depressed and there is considerable uncertainty surrounding UK agriculture.”

David Hudson, chief agricultural adviser for AMC, said: “The reduction in the base rate should encourage further investment in UK agriculture, which will add value to the farming industry.”