8 November 2001
Farmers to save 50m, says NFU
By Olivia Cooper
FARMERS will save 50 million a year following the Bank of Englands decision to cut interest rates, says the NFU.
The BoE cut rates on Thursday (8 November) by 0.5%, to 4%, the lowest level since 1963.
With borrowings of almost 10bn, the farming industry stands to save 50m/year in reduced interest payments, says the NFUs Ian Gardiner.
“This is a real benefit to hard-pressed farmers.
Unfortunately, it has not yet affected exchange rates, which would have a far greater impact on farm incomes.”
A 1% weakening of Sterling against the Euro would boost farm output by 80m.
The cut is much more aggressive than expected, and follows Tuesdays US Federal Reserve cut of 0.5% to 2% – the lowest in almost 40 years.
The European Central Bank also surprised some pundits by following the trend with a cut to 3.25%.
However, there is a flip side to the argument, as savings and bonds will have a slower rate of growth than before.
But it is hard to put a figure on farm savings, as these accounts tend to be separated from the farm business account, says Mr Gardiner.