Introduction | Rural Outlook
Inflation peaked at 11% and we've had eight successive interest rate increases since January 2022, taking the current Bank of England base rate to 4% (at the time of writing). While most economists think, or at least hope, that inflation has now turned a corner, and is starting to trend downwards, the market is still pricing in further interest rate increases before Spring.
What a year 2022 was for the UK - two monarchs, three prime ministers and four chancellors.
My introduction to last year’s Rural Outlook looked forward to what would hopefully be a ‘return to normal’ for UK PLC after two years of the pandemic disrupting pretty much everything in our day-to-day lives. The pandemic may
be behind us, but the economy continues to present challenges as we move through 2023.
While farmers and estate owners are being helped by strong commodity prices, significant increases in their costs, most notably fertiliser and fuel, has put a dampener on profits during 2022.
Our managed rural estates are so diverse, interest rate increases, and the disastrous mini budget in September 2022, impacted estates on many fronts, particularly those with significant borrowing.
Residential tenants are struggling to keep their houses warm, commercial tenants are struggling to pay their rents, and build costs are up significantly on most, if not all diversification projects.
However, that diversity of income streams, and strong balance sheet is what helps rural estates remain so resilient, even when times are tough. It is certain that, whatever 2023 brings us, it is not a time for inaction. Revisiting the estate strategy, considering when a succession event might occur, and what needs to be done about it, and planning for diversification, renewable energy and environmental projects are all key to success.
This year’s edition of Rural Outlook explores some of the challenges farmers faced in 2022, as well as looking at the opportunities available in 2023. Renewable Energy, Diversification and Natural Capital remain of vital importance to rural estates, and we consider them in more detail later in this edition.
Finally, we consider the rural land market, both the supply of land coming to the market and the values that is achieving. Our Rural Agency team transacted over 20,000 acres of land last year, much more than in recent history, and the values achieved have been universally strong.
Despite the challenges thrown at us in 2022, our Rural team had an excellent year, growing over 10% on an already positive year in 2021. There are opportunities out there for all of us, we all need to be proactive, dynamic and
entrepreneurial - and 2023 could still be a good year!