May 2009 - Financial Sticky Plaster or Fiasco?

While most of us had a reasonably good May Day Bank Holiday, catching up on the little DIY jobs you didn't get finished over Easter (just for the quiet life!) or enjoying a nice day out with the family, I would probably guess that the residents No 10 Downing Street had better days - something that no DIY expert will fix in a hurry!

Last week's Budget was almost universally condemned in the mainstream media.

Headlines like "a return to class war" or "Labour's last gasp" was not what Mr Brown & his team needed right now
Certainly the "bigger picture" stuff does leave you wondering. The Chancellor's forecasts for economic recovery look massively over-optimistic, while his policy to "tax and spend" our way out of recession is a gamble.

But within the world of agriculture, there are the positives as well as all those negatives to emerge from the acres of small print that always accompany the Chancellor's speech.

An extension of agricultural property relief to the whole of the EU and a doubled rate of first-year capital allowances where broadly welcomed while an increase in fuel duty was ridiculed - though the move to increase income tax for those earning over £150,000 a year will have only limited relevance to agriculture

Time will tell whether he has got it spectacularly wrong or made the best of a bad job, though no one seems very optimistic.

Just while I'm in the mood to rant about financial politics, what about the good old banks?

Everyone knows that they are desperate to recoup some cash. Having invested so recklessly for so many years their balance sheets are a mess and they are under intense pressure from shareholders to shore up their financial foundations.

It is therefore little surprise to see that, despite Bank base rates of a mere 0.5%, the cheapest loan available on the High Street is 7.9% - and that's on the basis that your credit rating is "good".

But what about the farming sector?

Ask any banker what their approach is to agriculture and they all say they see it as a relatively safe bet and are happy to continue lending to farmers at competitive rates. Unfortunately, what they say in public and what they do in private seem to be two entirely different things.......

Despite reassurances that base rate cuts would be passed on in full, many farmers have seen their borrowing rates adjusted upwards. The UFU have also complained of a "take it or leave it" attitude from bank officials, who cite a change in margin policy or a removal of their ability to negotiate with customers as the reason for the new hard line.

Right now, other than a kick up the backside, the banking sector needs seriously tougher regulations, to ensure the fair treatment of customers. As in the retailing sector, a voluntary code of practice is no longer enough.