2017 – A year to expect the unexpected?
Twelve months ago, whoever thought that we would be starting 2017 with the inauguration of Trump, Andy Murray ranked number one in the world, and of course the triggering of Article 50? The world is a very different place to what it was in January 2016. What does all this mean for British farming and what can be expected for the year ahead? Uncertainty is a given, but for those of us who are optimistic, we have a huge opportunity in our hands.
The short term Brexit boost through the sterling devaluation has been welcomed by most farmers, particularly those who are selling their goods abroad. The longer term implications will be more important, and there is no doubt that as we go forward, currency will remain highly sensitive to political announcements, decisions and even resignations. It was only this week that we heard the news of the UK Ambassador to the EU resigning over differences.
During 2016, the UK bank base rate was reduced from an historic low to an even lower level. Coupled with a significant quantitative easing programme it is clear that Mark Carney is trying to steady the ship for what is expected to be an unsettled ride ahead. UK stocks and other assets have risen also on the back of the Brexit currency effect. Recent price rises will be seen as the first signs of rising inflation, but this is not expected to be significant by any means.
It will be important for farm businesses to focus on risk management for the year ahead and to get the right business structure in place to help best cope with the uncertainly we are likely to experience during the policy vacuum that will persist during Brexit negotiations. Big projects planned for the year ahead? Money has never been so cheap to borrow with low rates offered to fix in for the medium and longer term, so shop around. But a word of caution, it will be wise to proof test and critic such plans against uncertainty and ensure that any investment has costed benefits.
But what do we know for the short term going forward? We are guaranteed to receive Basic Payment Scheme monies for the next couple of years, with the likelihood of these continuing until 2020. The Treasury has also created more certainty about Pillar 2 funding, confirming last Autumn that all grant fund projects, including agri-environmental schemes signed before the UK leaves the EU will be honoured. Both of which unfortunately rely on the RPA processing such payments, which of course adds a greater deal of unpredictability of when payments will be received!
Speculation remains as to whether it will be a hard or soft Brexit, but the following key points will need to be addressed over the coming months. Access to European markets after 2019; subsides; availability of European farm labour, and perhaps more importantly the formation of a good solid vision for British agriculture in a post Brexit world.
It was comforting to see this week that the CBI believes that the finance and the farming sectors should be equally prioritised when it comes to the Brexit negotiations, despite the financial services adding £120bn to the UK economy verses an agricultural contribution of £8.5bn. Let’s hope that Mrs May doesn’t treat UK agricultural market access as a soft concession when she gets around to trade negotiations with the EU.
For something to take all of this off your mind, we can always look forward to watching Trump take tea with the Queen or Wimbledon, with Sir Andy Murray taking to the court. An interesting year lies ahead.
For more information or to discuss further email Robert Moore or telephone 07590 230510