COUNTRYSIDE watchdogs are calling on the Government to act now to prevent the rural economy sinking into another recession.

They claim rising unemployment, shrinking profits and plummeting confidence in rural businesses has put the countryside on the edge of financial disaster.

The regional Country Land and Business Association (CLA) made its call in the wake of the latest Rural Economy Index, a survey it produces regularly with rural property experts Smiths Gore.

The purpose of the index is to gauge the health of the rural economy and for the first quarter of 2013 its data shows both agricultural and non-agricultural rural businesses are suffering across the region.

Farming is faring worst because of bad weather, poor harvests and the rising price of livestock feed.

The index’s measure of optimism has fallen by 40 per cent compared with last year. Sales have fallen in the past six months with orders, sales and profits expected to be lower in the next 12 months. Farming businesses also anticipate employing fewer people.

Non-agricultural businesses are also less optimistic although they still expect higher profits in the next year despite sales shrinking over the past six months and business enquiries falling. Hopes for higher employment have also faded with fewer non-farming businesses expecting to employ more people in the next year.

Just last year the independent Farming Regulation Task Force Implementation Group, chaired by Richard Macdonald, recommended more than 200 ways of reducing red tape for farmers and food processors.

And the CLA’s Richmond-based north regional director Dorothy Fairburn pointed out the latest survey came at a time when the Government’s priority was one of growth.

She added: “We call on the Government to reduce the negative impacts of over-regulation by implementing the MacDonald recommendations as soon as possible, putting in place a broadband infrastructure that is effective, affordable and available to all and encouraging rural businesses to fully embrace the principles of growth.”

The head of research at Smiths Gore, Dr Jason Beedell, said: “The rural economy has stalled and further recession is possible.”

He added: “For farming, bad weather, poor harvests and the rising costs of livestock feed have all played a part, which we largely expected.

“More shocking is the fall in expected profitability for non-agricultural businesses over the next 12 months.”

Last month the County Durham Community Foundation launched an emergency appeal to fund practical support for farmers in upper Teesdale struggling after last year's wet summer and the cold spring.

By last week, £35,000 had been raised - including £25,000 from the foundation.