Banks must follow lead in reducing lending rates to farms

The NFU has described today’s move by the Bank of England to slash interest rates as a bold and decisive move to inject confidence amid a deteriorating economic outlook.

The announcement comes on the back of the latest lending figures from the Bank, which shows debt in the agricultural sector have risen to record levels of £11 billion. The organisation is now calling on the main agricultural lenders to reflect the Bank’s decision in its lending rates to farms and other rural businesses.

Speaking after today’s announcement, NFU President Peter Kendall said: "This move by the Bank of England is both decisive and timely. An economic recession is a very serious threat to all businesses, farming included, and it is encouraging to see the Bank moving so swiftly to address the gloom.

"Farmers, like many small businesses have been feeling the effects of the credit crunch with some banks arbitrarily increasing lending rates despite the Government’s recent recapitalisation of the banking sector. This is compounding the impact brought about by higher input costs for fuel, energy and fertiliser, which could put a serious strain on many farming and horticultural businesses.

"While we appreciate that Bank of England base rates are only one part of the financial equation, it is important that this now translates into rate reductions by the sector’s main lending banks to ease the pressure on the sector."