Interest rate cut not ideal for all

The cut in interest rates to two per cent may hit spending by gardeners relying on their investments, according to HTA commercial director Andrew Maxted.

Maxted said: "Anything that helps stimulate consumer spending has to be a good thing. But because gardening consumers are less heavily mortgaged and more heavily reliant on income from savings, interest-rate reductions are not good for them, so it's a mixed picture for the sector. But, on balance, anything that gets the economy moving has got to be a good thing."

The NFU congratulated the Bank of England's Monetary Policy Committee decision to lower the base rate by one per cent. But it called for the main agricultural lenders to now reflect the bank's decision in its actual lending rates to farms.

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 benefiting 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," Kendall said.


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