Outlook 2026: Belt tightening needed as farm support dwindles

Britain’s taxpayers are generally feeling less well off than last year. The government has no reserves, its debt is mounting, and costs are rising.

A number of the wealthiest (best) taxpayers are emigrating. These people are also wealth creators, so their spirit of entrepreneurialism is leaving with them.

Meanwhile, the costs and risks of employing people are escalating, with national insurance hikes, minimum wage increases, rising employee benefits (such as long-term sick leave) and so on discouraging hiring.

See also: Small IHT concessions in overwise damaging budget

More and more people have a draw on government coffers.

According to the Office for National Statistics, 53% of UK households receive more in direct government spending (health, education, benefits) than they pay in tax.

This leaves very little for indirect costs, including farm support. Given the inevitable urban bias in government, there appears to be little interest in, or funding for, long-term agricultural policy.

Overshadowing all this is the national debt. At the time of writing this stood at £3trn, larger than the country’s entire gross domestic product, although history shows it can be reduced.

The government’s answer to the UK’s financial problems is economic growth to create greater tax revenues.

However, high wages for unskilled workers, escalating taxes, penalties for entrepreneurs and ‘redistributive’ payments have outstripped the relaxed planning laws brought in to help drive growth, which themselves take time to get going.

Globally, the level of economic tetchiness is palpable, whether it is apparently overvalued stock markets led by tech-hype, the protectionist movement closing the routes of competition, wider tariff costs mounting globally or the possible escalation of geopolitical unrest and the myriad implications that could have.

Labour costs

What does all this mean to UK farming?

Certainly, labour costs will rise faster than the value of farm produce, continuing a long-term trend that is easily overshadowed by other, more visible costs like machinery or variable costs.

Borrowing costs look set to remain around current levels. The ultra-low rates that prevailed for over a decade in the wake of the financial crisis are unlikely to return anytime soon.

Growth will continue to be elusive, and consumers could be reluctant to spend. This will hit diversified farm businesses that rely on discretionary spending.

Crucially, further tax raids may be forthcoming on a sector perceived to be ‘wealthy’.

However, farming has been in a far poorer state of financial affairs over the past few decades than currently. We know what our customers want, so we can provide it.

Commodity prices can change suddenly; political whims change quickly.

As state support for agriculture crumbles nationally, we have a lot of work to do to ensure the industry can operate without special treatment any longer.