Plan now to make the most of economic recovery
As the Bank of England keeps interest rates at 0.5% for the ninth month running, farmers are being urged to ensure their businesses are in a position to respond to any upturn in the economy.
"Recent Government figures show the UK economy shrank by 0.4% in the third quarter of the year, but I think we’ll look back on the second half of 2009 as the time when the economy turned a corner and began to recover," says Patrick Foley, chief economist, Lloyds Banking Group. However, he warns that the threat of unemployment and the prospect of reduced Government spending will mean recovery will be slow and at times painful.
"We predict that the UK economy will grow by 1.8% in 2009 as orders for British goods pick up. That might lead to an increase in the Bank of England base rate of 0.25% by the middle of next year."
Mr Foley also predicts that the pound will remain weak through 2010 giving a boost to exporters including farmers, particularly as other economies around the world recover faster than the UK.
Gareth Oakley, Agriculture Director for Lloyds TSB Agriculture, believes the fact that food sales have held up in the recession presents future opportunities for the industry.
"Well thought out and fully costed plans, together with the financial discipline that has served farmers so well during difficult times will be a key element of future success," he says. "Any planned investment should have the objective of improved business efficiency, whatever the farming sector."
Mr Oakley urges farmers to use the final few months of the year to give their businesses a financial health check and consider what their financial objectives will be for 2010.
"Now is a good time to sit down with your bank manager and other professional advisers and discuss the best way forward for the business," he says.
"For example, low interest rates could provide an ideal opportunity to restructure debts and plan future investments cost effectively. Meanwhile, the favourable currency position means it could be a good time to consider fixing the 2010 Single Farm Payment exchange rate. This could help manage the impact of volatility and make for more reliable budgeting.
