A RADICAL rethink is needed to recognise the contribution made to the rural economy by businesses other than farming and tourism, says a leading academic.

A reassessment of the rural economy is needed by governments across the UK and European Union, said Mark Shucksmith, director of Newcastle University's Institute of Social Renewal.

Speaking in Brussels, Professor Shucksmith was addressing a Notre Europe seminar on European policies for rural areas on Friday (13 December).

Different types of rural businesses contributed to the rural economy, said Prof Shucksmith. But many rural firms faced constraints as they try to grow, he added.

"Too many policymakers fall into the trap of thinking that rural economies are all about farming and tourism. This is not true, although of course we must support Europe's family farmers."

In north-east England, for example, 75% of rural Gross Value Added (GVA) was actually generated by the public sector, business services, distribution, hotels and retail, and manufacturing.

"These are not business sectors that most people associate with rural areas, but they are hugely important as a potential source of future economic growth," said Prof Shucksmith.

Newcastle University's surveys of rural businesses showed that many of these businesses had potential for growth, even in these challenging times, he added.

"However, rural firms face a number of barriers to growth. Businesses encounter difficulties recruiting skilled staff, and many have trouble finding premises where they can expand.

"This is particularly true for the manufacturing sector, which has the highest growth ambitions but is constrained by inadequate sites in rural areas and inappropriate planning policies."

Other obstacles faced by rural businesses across all sectors were regulation, lack of finance and slow broadband speeds, said Prof Shucksmith.

"Governments urgently need to address these barriers and help businesses overcome them.

"Without a radical rethink, there is a real risk that rural economies across Europe will be unable to contribute fully to the EU growth agenda, and some rural areas will even decline."

Prof Shucksmith was critical of "top-down" views of rural development, where infrastructure projects had been imposed on rural communities from outside.

"These policies are dictative, destructive and distort rural economies."

He also criticised "bottom-up" philosophies that encouraged rural economies to develop from within by responding to local priorities using local assets, but rarely with the support needed.

"Neither of these approaches is sufficient or effective and radical action is required, otherwise the potential of rural economies will be squandered."

Governments should take a 'networked' view of rural development, said Prof Shucksmith.

This could build local capacity and support local rural assets that already existed – without ignoring the role of the state in facilitating conditions to allow rural businesses to grow.

Philosophies such as localism and place-shaping, while important, were not enough.

"Governments must seriously consider their regional policies and rural-proof national initiatives to protect non-urban economies," said Prof Shucksmith.

They should prioritise provision of high speed broadband to rural areas, simplify the tax regime to encourage entrepreneurship and growth, and provide networking and incubation spaces for rural businesses.

"It is vital that governments recognise the potential contribution rural areas can make to national economic growth and invest in rural development.

"In this age of austerity it has never been more important that businesses that can create jobs and generate growth are equipped and supported so they can thrive.

"Supporting rural businesses is not an unaffordable luxury, it is a necessary investment in our future.