CLA REI shows remarkable confidence in the rural economy

The CLA, the rural economy experts, today published its second set of results from its Rural Economy Indicator (CLA REI).

The results show that confidence in the rural economy is significantly more buoyant than that of the general economy.

 

The CLA REI is conducted quarterly to sample confidence in the rural economy by those who live and work in the countryside.

 

CLA President Henry Aubrey-Fletcher said: "The results outline that confidence in the rural economy is up on the previous set of results, showing that businesses are fending off the negative effects of the recession better than the rest of the economy.

 

"Only four percent of respondents have no confidence at all in the rural economy over the next three to six months compared with an enormous 69 percent in the general economy - a jump of 13 percent compared with the first quarter."

 

The CLA President continued: "Twelve percent believe their rural business will perform well in the short-term, and around three-fifths, 58 percent, of those surveyed saw business performance as being in line with expectation over the next six months."

 

However, he said we must not let the positive results cloud our view of the problems facing the rural economy.

 

He said: "Many businesses are suffering, with lack of cash flow being a major obstacle to productivity as well as 87 percent of respondents stating that effective and affordable broadband is vital for rural businesses – something for which the CLA is vigorously campaigning."

 

Recently, James Gray, MP for North Wiltshire, drew attention to the issues highlighted by the CLA REI when he discussed the impact of the recession on the rural economy at a Westminster Hall debate.

 

The CLA President added: "We are grateful to Mr Gray for initiating such a vital debate, and trust he will continue lobbying for effective broadband in rural areas to keep businesses afloat."

 

 

 

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: As a membership organisation, the CLA is dedicated to supporting landowners by advising them on how best to protect and maximise their asset: the land. For further information, please visit www.cla.org.uk

 

 

The CLA's Rural Economy Index (REI)

 

Highlighted Figures for Quarter Two

 

 

·        Only four percent have no confidence at all in the rural economy over the next three to six months

 

·        This compares to 69 percent having no confidence at all in the general economy - a jump of 13 percent compared with first quarter

 

·        Twelve percent believe their rural business will perform well in the short term

 

·        Nearly three-fifths (58 percent) of those surveyed saw business performance in line with expectation over the next 6 months

 

·        All respondents had no confidence in the state of the general economy in the short term

 

·        Eighty-seven percent believed it was vital for business to have effective and affordable broadband

 

·        Lack of cash flow is the main obstacle to economic regeneration in rural areas

 

·        Consumer spending also needs to increase. Spending on infrastructure also needs to increase

 

·        Volatility said to be the key to lack of business confidence

 

The CLA's Rural Economy Index (REI)

 

 

1.         As part of its assessment of economic conditions in the rural economy, the CLA undertakes a business survey – called the "CLA REI" – to gauge the level of confidence of 100 of the CLA's business members. This survey was conducted in March 2009. The REI 100 is conducted each quarter and helps build up a picture of how the economy is operating in rural areas.

 

Types of business

 

 

2.         The REI 100 surveyed a representative sample of rural businesses. These ranged 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 £2.5million and one staff to 15 staff.

 

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 graph below shows that for Quarter Two around 12 percent believed that their businesses would perform well with the potential for growth. This is a contraction of four percent from Quarter One. However, there has been an increase in those who believe that their business will perform according to plan, 58 percent compared to 50 percent in Quarter One. Indeed, those who were more pessimistic as to business performance fell from 34 percent in Quarter One to 30 percent in quarter 2. As importantly, there has been an increase in confidence in the rural tourism sector as bookings have increased prior to 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 Two when compared with the previous quarter continue to buck the general economic trend.

 

7.         According to the respondents for Quarter Two, 22 percent were quietly confident of the state of the rural economy over the next three to six months, compared to 18 percent recorded for the first quarter. Further, those not very confident for the rural economy fell by 13 percent to 48 percent. Finally, confidence appears to be holding up with a one percentage point fall in those who have no confidence in the rural economy down to four percent from five percent. This contrasts markedly with the perceptions on the overall economy (see below).

 

 

 

Confidence in the general economy

 

 

8.         It is not unexpected that respondents confidence in the short term prospects for the general economy are not positive. However, this position has hardened significant. For Quarter Two, 69 percent had no confidence at all in the state of the general economy, up from 42 percent in the first quarter. Moreover, those who were not very confident in the general economy made up the remaining 31 percent. This hardening attitude appears to be based on the belief that the financial stimulus measures introduced by the Government are not seen to be working.

 

 

The need for broadband

 

 

9.         For the second quarter CLA REI, respondents were asked an additional question regarding the importance of broadband in the business and at home. They were asked whether broadband was:

(a)               absolutely vital;

(b)               very important;

(c)               reasonably important;

(d)               not important; or,

(e)               not important at all.

 

10.       In terms of business use, some 87 percent regarded broadband as either absolutely vital or very important. This actually increases to 92 percent as to the importance of broadband in the home, lending important support to the view that broadband is becoming increasingly important in the social make up of rural communities.