€ SFP option offers less risks

FARMERS WHO receive their new single farm payment in euros could take out cheaper loans without exposing themselves to currency exchange risks, says Henry Graham of Clydesdale and Yorkshire Bank.

Interest rates between the UK and the Eurozone are widening again. Respective base rates stand at 4.5% and 2%, making loans across the Channel more attractive to farmers in the UK.

“While the option of taking out a low-interest rate loan in euros is already possible, borrowing of this type is only really advisable to those who have a secure income in euros,” said Mr Graham.

“The currency exchange risks attached to borrowing in euros and paying the money back in pounds has always been too great to make the proposition feasible.”

Ideally, borrowers would match loan repayments with SFP income to avoid any risk.

Alternatively, money left over could be used to buy products or machinery in a eurozone country, he added.

A spokeswoman for the Rural Payment Agency said the body would consider requests from farmers who wished to have their SFP paid in euros.