Rural businesses show resilience, but investment curtailed by rising costs, report finds

Rising costs are causing serious and widespread problems for rural businesses which is curtailing their ability to invest and grow, according to a major new survey.

Two-thirds of rural firms in the North East, South West and West Midlands - increasing to 69% of businesses in more remote areas, and 82% in the hospitality sector - report that rising costs have significantly impacted cash flow over the last year, with four out of 10 of them reducing, cancelling or postponing investment.

But, as in the Covid-19 pandemic, the survey showed that rural firms have been particularly resilient with 41% increasing their turnover, compared to 35% of urban businesses, and 18% decreasing their turnover, compared to a quarter of urban businesses.

The findings, from the National Innovation Centre for Rural Enterprise (NICRE) 'Cost-of-doing-business crisis: rural impacts and adaptation', is the first State of Rural Enterprise Report published from its second large-scale business survey carried out over the summer.

The CLA has welcomed the report, as it backs up our previous research and work. The All Party Parliamentary Group (APPG) for Rural Business and the Rural Powerhouse released a detailed report in the spring, exploring the cost-of-living crisis in rural areas.

Researched and funded by the CLA, including evidence from more than 25 industry bodies, the report highlighted the extent of the government's failings when it comes to employment, housing, energy and enterprise within rural communities.

Responding to the NICRE survey, CLA President Victoria Vyvyan said:

“Farmers, landowners and rural businesses are dynamic and forward-thinking, but face many challenges and barriers that impact them to a greater extent than their urban counterparts, as highlighted in this report. These include energy costs, connectivity issues, transport and fuel, housing, and skills provision and labour availability.

“Rural communities are being hit hard by the cost of living crisis, and persistently low economic productivity is hampering our businesses and workers.

“The CLA’s Rural Powerhouse campaign highlights how the rural economy is 19% less productive than the national average. By closing this productivity gap, we could add £43bn to the national GDP. Supporting the next generation of rural businesses to succeed and thrive is crucial.”

The full NICRE report can be downloaded here.