13 January 2000
Interest rate blow to British farmers
By Donald MacPhail
INTEREST rates have been increased to 5.75%, putting pressure on farmers with loans and making it more difficult to compete with foreign producers.
The Bank of Englands Monetary Policy Committee (MPC) recommended the quarter-point rise at its monthly meeting on Wednesday (13 January).
The rise was expected after the base rate remained unchanged in December, following quarter-point increases in September and November.
But farmers burdened with land and machinery loan repayments will be hit by this increase at a time when many incomes are already under severe pressure.
Although inflation is low at 2.2%, the Banks nine-member MPC voiced concern about the possible effect of rising house prices on the economy.
It is worried that increases in consumer spending and wages could lead to higher inflation if the economy is left to grow unchecked.
But the rate rise is likely to strengthen the Pound, drawing in cheaper imports and making it more difficult for farmers to compete with imported produce.
Pig farmers reported earlier this week that they were losing 4 million a week, 1.5m of which was attributed to the strength of Sterling.