Under the new Single Payment Scheme regime, the region's farmers
are having to re-think many aspects of their business, including
their borrowing arrangements.
With interest rates in Europe presently running at about half
those in the UK, borrowing in euros is once more an attractive
option, say rural business advisers.
By combining euro borrowings with a structured loan that uses
the single payment and opting for this to be paid in euros, farmers
could potentially achieve a substantial reduction in borrowing
costs over the next few years.
Banks are now increasingly aware of this opportunity and are trying
to offer practical means for such arrangements.
Euro borrowing rates are about 2% cheaper than in the UK, which
means a cost saving of around 40%.
If the term is kept relatively short and the SPS entitlement taken
in euros, the currency risk normally associated with such arrangements
can be avoided.
Andrew Ayre, North East spokesman for the Institute of Chartered
Accountants' Farming & Rural Business Group, said: "It
may require some flexible banking arrangements to accommodate this,
but overall borrowings and security on offer remain the same."
Mr Ayre, a partner in Greaves West and Ayre, Berwick, added: "Some
banks seem more willing and organised to set this up than others.
However, if interest costs can be reduced by 40% and savings taken
off borrowing over the next three or four years, that has to be
"The country needs a thriving and profitable farming industry" -
Farm Payments Must Remain Top Priority
Farm Payment Relief
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