Investment for non-agricultural businesses remains a significant issue. Confidence in the farming sector has also dropped.
Non-agricultural businesses saw investment fall by 15% from -2% in the first quarter of 2012 to -17% in the second quarter.
Confidence among the farming sector for the next 12 months has fallen by 25% from +26% to +1% over the same period.
The figures are contained in the Second Quarter findings of the Rural Economy Index (REI) published by the Country Land and Business Association with Smiths Gore.
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.”
A rise in six out of eight indicators suggests some encouraging signs for non-agricultural businesses.
But Jason Beedell, head of research at Smiths Gore said: 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."
The CLA and Smiths Gore worked together to create the Rural Economy Index (REI) to provide an insight into the confidence of the rural economy.
This analysis is the second in a series of quarterly reports. The full report can be downloaded here.