West Midlands rural areas hit particularly hard by recession

Aerial shot of rural WorcestershireThe Observatory’s Skills Team are working on an assessment of skills and labour market issues in the rural areas of the West Midlands on behalf of the Regional Skills Partnership and the Rural Affairs Forum.

While we expect to publish in April 2009, we can report now on emerging findings relating to the impact of the recession.

Rural areas of the West Midlands have out-performed the rest of the region in recent years in terms of business growth, new business formation and employment growth.

However, there remains a significant dependence on lower value added sectors and industries such as agriculture, manufacturing industries such as food and drink, construction, hotels and catering, and transport.

The small and micro-businesses that dominate the West Midlands’ rural economy have been hit particularly hard by the recession as they tend to rely more heavily on finance secured on mortgage lending, overdrafts and credit card borrowing.

As a result they have been particularly affected by the reduction of credit and tighter lending terms, according to January 2009 rural economies recession intelligence (PDF, 144KB) published by the Commission for Rural Communities.

The knock-on effects of these developments have been particularly significant, as in many rural communities there are few alternative sources of employment and unemployment levels have risen particularly sharply.

Numbers of claimants have increased by nearly 30% from just over 19,500 in October 2008 to nearly 25,300 in December 2008. This compares with an increase of 18% across the West Midlands as a whole (source: Office for National Statistics).

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