Low confidence and investment is damaging rural economy, says CLA/Smiths Gore survey

24 October 2013

Countryside businesses are facing a significant drop in confidence and investment, according to the Second Quarter findings of the CLA/Smiths Gore Rural Economy Index (REI).

Confidence among the farming sector for the next 12 months has fallen dramatically by 25 percent from a net balance of plus-26 percent to plus-one percent compared with the First Quarter.

Investment for non-agricultural businesses remains a significant issue with a fall of 15 percent in net balance from minus-two percent in Quarter One to minus-17 percent in Quarter Two.

CLA Deputy President Henry Robinson said: "These Second Quarter findings clearly highlight how damaged the rural economy is becoming due to low confidence and investment. "The Eurozone crisis, higher input costs, slow or no broadband and weak consumer confidence are some of the factors hitting confidence in trading conditions with the inability to secure capital funding the main reason for lack of investment. "The Government must strive to reduce red tape, relax planning rules and improve access to broadband if the rural economy is to recover."

Jason Beedell, Head of Research at Smiths Gore said: "Although there are some encouraging signs for non-agricultural businesses - six out of eight indicators having risen - a significant drop in expected investment is leading to a very weak position. 

"The message to local and national government is clear - the business environment remains fragile and investment should be supported."

Read the Second Quarter Rural Economy Index.