Latest interest rate cut is another positive move, says NFU

The NFU is congratulating the Bank of England on today’s aggressive move to reduce interest rates to their lowest level for more than half a century and equal to the lowest level since the Bank was founded in 1694.

A decision by the Monetary Policy Committee to lower the base rate by one per cent to just two per cent is being seen as a positive move for the industry although there are calls for the main agricultural lenders to now reflect the Bank’s decision in its actual lending rates to farms and other rural businesses.

Speaking after today’s announcement, NFU President Peter Kendall said: “Cutting the rate of interest by a further per cent is a sensible move at the current time. For farmers and growers on base rate tracking loans and overdrafts, this ought to bring some additional financial leeway at a time when many are facing substantial input costs and other bills.

“However, in reality, it appears that many farmers and rural businesses are not fully benefitting from base rate cuts as banks appear to be seeking to offset their own lending concerns by increasing margins and introducing new fees and other terms. This activity may be for some legitimate reasons but seriously hampers the ability of farmers as small businesses to benefit from rate cuts and help drive the British economy forward. The NFU has this week launched a survey of its members in order to gauge more accurately just how their relationships with banks have changed in recent months so that we can provide evidence to both the banks and Government.

“I am also putting out an urgent call for SPS payments to be paid as early as possible. Although the window for Single Payments has now opened, I fear it will still be some time before any money hits the accounts of the vast majority of farmers in England. Although around 80 per cent of Welsh farmers should be getting their payments before Christmas, England is still suffering from the legacy of 2005/06 when a more complicated system of SPS payments was introduced. Although the position is better today than in previous years, we will not be satisfied until our performance matches that of Scotland and Wales.”

Notes to editors:
The NFU is conducting a confidential banks behaviour survey of its members to find out how they have been affected by the current financial crisis. The closing date is midnight on Wednesday December 31 2008. 


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