Euro Conversion Rate

Farmers may have been eagerly watching the £/€ exchange rate through September so far, to see at what level their Single Payments will be converted from Euros to Sterling.  For 2014 at least, it will remain the ‘spot-rate’ on the 30^th September that fixes conversion rather than the average for September. 

The legislation that introduced the Basic Payment Scheme gave Member States the option of moving to the average of the official ECB £/€ rates during September.  This was instead of using only the rate on the last day of the month.  A single day can throw up ‘rogue’ rates so a month average might provide less volatility.  Like much of the financial provisions of CAP reform, this change was possible for the 2014 year – i.e. the last year of the Single Payment.   

We have now confirmed that DEFRA has decided not to take up this option for the 2014 scheme.  Therefore, the focus will remain on the 30^th September.  Although not confirmed, we believe this is a Member State decision (i.e. it applies to the whole UK) and not a devolved matter.  DEFRA are looking at the situation for 2015, and may well shift to the month-average next year. 

Over the last few days the Pound has been relatively weak against the Euro.  This would be good in terms of Single Payments (a Euro buys more Pounds).  The uncertainty around the Scottish Independence referendum is causing the current weakness.  Depending on the result, the Pound could be pushed in either direction before the 30^th.