The Bank of England's surprise decision to cut UK interest rates to 3%, the lowest level since 1955, was welcomed by Shadow Secretary of State for DEFRA Tim Farron MP, but he has warned that this will not be a panacea for the farming industry.
Mr Farron's concern comes after increasing doubt emerged over whether banks would pass on the cut to customers and savers.
Commenting Mr Farron said:
"In theory this cut should provide some much needed relief in the credit markets but in reality it won't help unless confidence is restored amongst the banks.
"The agricultural industry is sitting on combined debts of £12billion with the average farm having debts of around £100,000- a third of which is made up of overdraft facilities.
"The problem isn't just high interest rates; but also the availability of credit. Banks are being increasingly cautious about lending to businesses, particularly farmers, which means we will continue to see sustained high debt servicing costs.
"What this means, is that today's announcement will only bring relief if it is followed by an immediate reduction to the rate of interests farmers pay. Only by reducing customer rates will farmers have the relative security needed to run a successful business."
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