Rural economy is 'starting to recover'

RURAL businesses are more confident and optimistic than they were three months ago, suggest the latest figures.

While not out of the woods, figures from the Rural Economy Index for Quarter 2 of 2013 suggest early signs of recovery from the economic downturn.

It follows results for Quarter 1 that showed a threat of further recession for the rural economy.

Devised by Smiths Gore in partnership with the Country Land and Business Association, the latest index shows farming businesses are also a little more optimistic than they were in Quarter 1.

The first half of 20123 was difficult for many farmers, with many businesses still contending with the effects of difficult weather conditions in 2012.

Non-farming rural businesses are more positive than their agricultural counterparts. They are more confident about profitability over the next 12 months compared with farming businesses.

Jason Beedell, head of research at Smiths Gore, said: "Confidence is critical for all businesses and is often an early indicator of profitability.

"Confidence influences investment and production intentions.

"Our analysis of projected business performance shows however that there is a marked difference in the expectations of agricultural and non-agricultural businesses."

Greater optimism expressed by non-farming businesses translated into expectations for higher sales, Mr Beedell explained.

Confidence also translated into the prospects for investment and employment.

Here again there was a marked difference between the agricultural and non-agricultural sector.

Investment expectations of non-agricultural businesses were now at their highest for over a year and while they expected to employ more people, the sentiment was expressed with a degree of caution.

"There is evidence, albeit weak, that sentiment in the rural economy is on the cusp of change," said Mr Beedell.

"There was tangible concern last quarter that there was a silent crisis taking place in the rural economy.

"With the government claiming that UK high streets sales have been rising and UK factories witnessing the biggest boom in 20 years, there was a real concern that the rural economy was being forgotten.

"While there is a long way to go before agricultural and non-agricultural businesses can claim that the economic revival has leaked out into the country, we can be cautiously optimism."



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