The Federation of Small Businesses (FSB) has called for swift policy reforms to bridge the £43billion rural-urban productivity deficit in its latest report into rural trade.
The Growth Belt: Supporting Rural Small Businesses sheds light on the hurdles faced by rural small businesses, including inadequate transport, unreliable broadband, and rising energy costs.
It also highlights how the Government's 10-point-plan for rural productivity, published in 2015, has made little progress - leading to £43bn in lost economic contribution.
The report's findings show that in 2022, only 43% of rural firms planned to grow, compared to 49% in urban areas. Additionally, 37% of rural businesses reported a 10% increase in operating costs.
Poor broadband connectivity in rural areas is also a significant issue, with 32% of rural firms reporting internet reliability issues, compared to 17% of urban businesses. Consequently, 14% of rural businesses say slow internet speeds affect their ability to contact customers, while 11% believe their competitiveness is hindered by poor connectivity. Meanwhile, 5% of these firms report a loss in sales due to inadequate internet connections. FSB is calling on the Government to update the Universal Service Obligation minimum requirements for upload and download speeds to combat this.
Other recommendations include raising the basic VAT taxable turnover threshold from £85,000 to £100,000, increasing England's Small Business Rate Relief threshold to £25,000 from £12,000 and ensuring electric vehicle charging points are available in rural UK areas by 2030.
Local councils in England should also appoint Local Business Champions for better business engagement and funding applications.
FSB National Chair Martin McTague said: “Our report offers concrete, feasible solutions to narrow the productivity gap and unlock these rural small firms’ full potential – not just for now, but for generations to come.
“The Government has the power to create a sustainable, resilient economy that benefits everyone, regardless of the size of their rural community.”