CLA survey shows countryside confidence rising

The CLA today (Wednesday, 15 July) released the results of its quarterly rural economy survey.

CLA Rural Economy Index (CLA REI) respondents demonstrated that confidence in the rural economy was on the increase and that confidence was also up against the economy as a whole

 

CLA President Henry Aubrey-Fletcher said: "There has been a 16 percent increase in those quietly confident in the rural economy – a percentage that has grown with each of our surveys.

 

"The rural economy is, on the whole, faring a lot better than the general economy. This should be recognised and encouraged by Government.

 

"However the survey highlighted poor cash flow, lack of credit and planning constraints as the main factors holding back the countryside."

 

 

CLA MEDIA CONTACTS:

 

For further information and interviews:

 

Phillippa Coates, Press Officer, 020 7460 7934, phillippa.coates@cla.org.uk

 

Oliver Wilson, Director of Communications, 020 7460 7936 or 07702 928828, ollie.wilson@cla.org.uk,

 

 

Out of hours: 020 7201 9511.

 

 

NOTES TO EDITORS:

 

1. The CLA Game Fair, the world's biggest countryside event, will be held at Belvoir Castle, near Grantham, Leicestershire from Friday, 24 July – Sunday, 26 July.  For full details and to apply for Press Passes to the show:  www.gamefair.co.uk  Contact: Fiona Eastman, Director of Marketing and Show Development, fiona.eastman@cla.org.uk or Marishelle Gibson, Senior Press Officer, marishelle.gibson@cla.org.uk

 

 

 

The CLA's Rural Economy Index (REI)

 

Highlighted Figures for Quarter 3 (April – June 2009)

 

The latest results from the CLA's Rural Economy Index 100 show a remarkable turnaround in the way rural businesses see the short term position of the UK economy.

 

• The reduction in those "not very confident" in the state of the rural economy has continued with a fall of 10 percent to 38 percent compared to April 2009,

 

• This has been matched with a 16 percent increase in those "quietly confident" in the rural economy, up from 22 percent in April 2009 and increasing by 20 percent compared to 18 percent in January 2009,

 

• In terms of business performance, there has been a marked decline in those who believe that performance will be "worse than planned", down to 14 percent compared to 34 percent in January 2009 (30 percent in April 2009),

 

• The CLA REI 100 shows a 11 percent jump from April 2009 (69 percent compared to 58 percent) of those surveyed who saw business performance in line with expectation over the next 6 months,

 

• There appears to be a glimmer of hope for confidence in the state of the general economy as well with seven percent now quietly confident in the short term compared to zero percent for both indices in January and April,

 

• Lack of cash flow and the lack of credit remain the main obstacles to economic regeneration in rural areas,

 

• In addition, the constraints imposed on rural economic development by the planning system are leading to the frustration of business opportunities and need to be addressed immediately,

 

• There is also concern over the future of the Government meaning that business decisions are being postponed pending a general election,

 

• Reducing the extent of regulation of rural businesses must be a priority,

 

• A large number of respondents are calling for an immediate general election.

 

The CLA's Rural Economy Index (REI) 100

 

Introduction

 

1.         The CLA's Rural Economy Index (REI) 100 measures the level of confidence in the rural economy. It is a business survey of 100 CLA business members across England and Wales and is conducted each quarter and helps build up a picture of how the economy is operating in rural areas. The following results are from the third REI which are published in July. The next REI will be published in October.

 

Types of business

 

 

2.         The REI 100 surveyed a representative sample of rural businesses. These range from agriculture and traditional estates, rural services (including rural surveyors and land agents), rural tourism operators and food service outlets.

 

Annual turnover and employment

 

3.         The types of businesses surveyed illustrate a mix between micro-businesses and SMEs. This is reflected in the size of turnover and the number of staff employed ranging from £20,000 to £30million and one staff to 70 staff. Of those who responded turnover totalled some £110million.

 

Projected business performance

 

 

4.         Respondents were asked whether their businesses would, over the next six months:

(a)               perform well with the potential for growth,

(b)               perform according to the business plan,

(c)               perform worse than expected.

 

5.         The chart below shows that for Quarter Three some 17 percent believed that their businesses would perform well with the potential for growth. This is an increase of five percent from quarter two. In addition, there has been an 11 percent increase in those who believe that their business will perform according to plan, 69 percent compared to 58 percent in Quarter Two. Strikingly, those who were more pessimistic as to business performance fell to its lowest level to 14 percent compared to 30 percent in April and 34 percent in January. As recorded in the last quarter's index, there has been an increase in confidence in the rural tourism sector as bookings have increased with the advent of the tourism season.

 

 

 

Confidence in the rural economy

 

 

6.         The perception of confidence is a very good indicator as to the short term outlook for the rural economy. The results for Quarter Three, when compared with the previous quarters show a definite trend that the rural economy is robust and confidence is returning.

 

7.         According to the respondents for Quarter Three, 38 percent were quietly confident of the state of the rural economy over the next three to six months, compared to 22 percent in quarter 2 and 18 percent in Quarter One. Further, those not very confident for the rural economy fell by a further 10 percent to 38 percent. This represents a fall of some 23 percent over the last six months. As significantly, those who have no confidence in the rural economy fell to zero in Quarter Three, compared to four percent in the last quarter and five percent in Quarter One.

 

 

 

Confidence in the general economy

 

 

8.         Clearly, the results on anticipated business performance and perceived confidence in the rural economy reinforce the trend that was highlighted in the Quarter Two results. What would be expected is for perceptions as to the short term prospects for the general economy being rather negative. This was certainly the case for the first two quarters.

 

9.         However, there appears to have been a more positive change. The results for Quarter Three show that seven percent were quietly confident in the progress of the general economy for the next three to six months. Although this appears rather small, it represents a more positive attitude when the first two quarters showed that no respondent was quietly confident.

 

10.       Regarding those respondents who either were not very confident or who had no confidence at all in the general economy in the short term, this had fallen from 100 percent in Quarter Two to 83 percent in the latest results, a fall of some 17 percent. It is clear that there is a feeling that the general economy is coming out of recession.

 

 

Price increases in fuel

 

 

11.       For the third quarter CLA REI, respondents were asked an additional question regarding the impact the increase in the price of fuel was having on the business. They were asked whether the impact was:

·         substantial,

·         significant,

·         minor,

·         no real impact.

 

12.       Rather surprisingly, given the increase in the price of fuel (diesel and unleaded) over the last three months, only 28 percent regarded the impact as significant on their business. A majority, some 60 percent saw the price increases as a minor impact and 11 percent of respondents said that the increase in the fuel price had no real impact. There could be a number of reasons for such a perception and it will be very dependent on the type of business operation. For example, an increase in fuel costs will have both a significant direct and indirect impact on a tourist attraction business. However, the impact on a farming business is likely to be less unless the increase in the fuel price also leads to a hike in price of other inputs, such as fertilisers. 

 

 

 

Obstacles to economic stability

 

Rural

 

13.       There remain a number of key factors that are seen as obstacles to rural economic stability, these being:

·         lack of cash flow and available credit,

·         reduction in consumer spending,

·         increased government regulation in small businesses,

·         low commodity prices.

 

14.       In addition to these, the respondents identified the planning system as a key constraint on the ability to expand. Added to this the issue of unemployment is now regarded as a major problem together with exchange rate fluctuations.

 

General

 

15.       Political uncertainty has been raised by most of the respondents. Taken together with the expenses scandal, it would appear that confidence in Government efforts at stimulating the economy is extremely low. As interesting is the fact that this uncertainty extends to a future government given that, at present, there does not appear to be a clear political direction in terms of rural economic policy as far as the respondents are concerned. 

 

Stimulating economic activity

 

 

16.       It remains the case that rural businesses need Government support through both direct and indirect measures. Actions requested by the rural business sector include:

·         spending on infrastructure must be increased substantially,

·         regulation must be reduced for small business,

·         credit facilities must be freed up and increase the ability of small business to access borrowing,

·         the nation should not panic.

 

17.       Finally, a large number of respondents commented that a general election should be called as soon as possible.

 

 

Concluding remarks

 

18.       At this time of economic volatility, the third quarter results further underline the point made in previous surveys that the rural economy is more robust that many realise. Furthermore, there is an increasing feeling that the rural economy is likely to act as the driver to pull the general economy out of recession. Although the CLA REI 100 provides a snapshot as to the perceptions of the economy, the increase in confidence is supported by views from other organisations, such as the Commission for Rural Communities.

 

19.       Clearly, the results from the third CLA Rural Economy Index strengthens the view that those in rural areas are more attuned at weathering economic downturns than those in other sectors, most particularly the banking sector and manufacturing. It is interesting to note that there appears to be a degree of stability in the rural economy which is lacking in the general economy and it could very well be the case that rural businesses can act as a benchmark for other, more urban based, businesses in the future.