George Eustice was grilled by the Rural Economy and Connectivity Committee on the impact of the UK’s withdrawal from the European Union for Scottish agriculture, fisheries, and the wider food and drink industry.

He explained that negotiations are ongoing, with two “particularly difficult sticking points” around State Aid and fisheries partnership agreements, the latter in terms of access to UK waters and quota sharing arrangements.

“Alongside that we’ve been working to prepare industries like meat and fish processing so that they are aware of the additional documentation that will be needed for exports,” Eustice added.

He was then quizzed about tariffs affecting livestock farmers, in particular sheep, and the potential for some kind of compensation scheme.

“We want to get tariff free trade on all goods, but we accepted that the EU weren’t up for any kind of special agreement, so since then we’ve been working on a simple trade deal much like the EU/Canada one,” Eustice stated.

“You can take a horse to water, but you can’t make it drink, so if the EU are unwilling to do a tariff-free trade agreement, then we would as a country have to review what our response to that would be and we would redouble our efforts to open new markets for lamb like the US and the Middle East.”

He explained that the UK would pursue a strategy of import substitution and in the interim there would be things like movements in exchange rates to smooth the passage from one system to another.

Firms are calling for more financial support to avoid “catastrophic consequences” from tougher coronavirus restrictions.

Without more help there could be mass redundancies and business failures, the British Chambers of Commerce warns.

Its call for a new approach comes as tougher restrictions are imposed on large parts of the UK.

The government said it had already put in place support worth more than £200bn to help firms cope.

“We know this continues to be a very difficult period for businesses,” a spokesman said. “That’s why we have put in place a substantial package of support.”

The government has already announced extra support for firms affected by new measures to control the virus, including providing two thirds of workers’ wages where firms have been told to close. Firms will also receive grants of up to £3,000 per month.

There is additional funding for local authorities and devolved administrations.

The director general of the BCC, which represents 75,000 firms of varying sizes across the UK, has written to the prime minister calling for a new set of criteria to be applied before imposing tougher restrictions.

“The situation for business grows graver by the day,” Adam Marshall wrote.

“Enhanced support must be given to those facing the indirect impacts of restrictions and closures – in supply chains, tourist destinations and town and city centres.”

After confirmation that Britain has entered the deepest recession since records began, new analysis seen by the Observer finds that as many as 3 million jobs will still be reliant on the government’s furlough scheme by the time it is closed at the end of October.

While 1 million jobs will be lost permanently as a result of the pandemic’s impact and changing demand, it finds that the remainder could be saved in the long run by adopting a successor to the furlough scheme focused on viable jobs in the hospitality, entertainment and construction sectors.

The new research, drawn up by the Institute for Public Policy Research thinktank, warns that simply withdrawing the furlough scheme with nothing in its place will cause unemployment at levels “not seen since the Great Depression of the 1930s”. It also calls for major increases in universal credit to help those who are out of a job – an idea that is gaining support among Tory MPs.

The public is split on extending the furlough scheme beyond October, but most people want the support extended in some form, according to an Opinium poll for the Observer. It found 28% say the scheme should end as intended, 33% back extending it for sectors most affected by Covid-19, while 18% support extending it for all sectors.

Simplifying the planning system and making improvements for rural areas could unlock billions of pounds in the economy, according to the Country Land and Business Association (CLA).

The organisation’s policy report Rural Powerhouse: a planning system designed for the rural economy was published on Friday 17 July.

It explains how a simpler and properly resourced planning system can support, enable and enhance development in the countryside.

Currently, the planning system is complicated, lengthy and expensive, and actively discourages people from investing in rural areas through development, says the CLA.

Mark Bridgeman, CLA president, said the government is looking to adapt the planning system – as shown by the prime minister’s recent “Build, Build, Build” announcement – and it is crucial to ensure it works in rural areas as well as the urban high street.

“The sheer cost of going through the planning system makes it an increasing hurdle, and this is a big issue for many of our members,” said Mr Bridgeman.

“Applicants must spend thousands of pounds on planning costs without really knowing if they’re going to be able to make it a success. Our key focus is how can we simplify this?”

The phasing out of the Covid-19 job retention scheme could be ‘too soon’ for the rural sector as many firms in the countryside are still in ‘survival mode’, it has been warned.

Last week the Chancellor of the Exchequer unveiled details of a gradual winding down of the furlough scheme to its conclusion at the end of October. 

These changes will see the introduction of a flexible furlough and employer contributions to wage costs.

Rishi Sunak also announced the second and final tranche of the Self-Employed Income Support Scheme (SEISS), with a second grant in August worth 70% of average trading profits over a further 3 months and capped at £6,750.

From 1 July, a month earlier than previously announced, businesses will be able to bring back furloughed workers on a part-time basis.

Employers will be able to decide when and what hours their employees work, but they will be responsible for paying their wages for the time they are working.

New research suggests some parts of the UK have seen an increase in employment despite the severe impact the coronavirus outbreak has had on the economy.

Rural communities in areas such as South Norfolk, Omagh and Moray have had a surge in job adverts, according to the Recruitment and Employment Confederation (REC).

Demand in professions such as roofers, security guards, artists and NHS staff have increased, with the number of job vacancies in Breckland and South Norfolk growing by 8.7 per cent week-on-week between the start and middle of May.

The report also noted many areas of Scotland and the north east of England saw growth. Argyll and Bute noted a 4.5 per cent increase in postings, while both Durham and Northumberland saw a 2.4 per cent increase.

In contrast, the largest weekly falls in vacancies were reported to be in the south west and north west of England.

Newcastle University and its partners are to lead a new National Centre that will support enterprise, resilience and innovation among rural firms and unlock the untapped potential of rural economies across the UK.

Led by experts from Newcastle, Warwick, Gloucestershire and the Royal Agricultural Universities, and working with businesses, policy makers, enterprise agencies and communities, the centre has been awarded £3.8 million of funding by Research England.

In England alone, rural businesses comprise over half a million enterprises, 3.6 million employees and contribute over £260 billion to GDP.

Through the National Innovation Centre for Rural Enterprise (NICRE), the aim is to help build the capabilities of policy makers, support agencies, rural businesses and their advisers to create resilient and sustainable economies fit for the 21^stcentury.

Centre director Jeremy Phillipson, professor of rural development at Newcastle University (pictured), said: “A thriving rural economy is crucial to the future prosperity, well-being and resilience of communities across the UK.

“The need to encourage and release the dynamism and untapped potential of rural areas is even greater now with the combined uncertainty of Brexit and impacts of COVID-19 and what the implications will be, not just for rural areas, but for the UK economy as a whole.”

Calls have been made for VAT on tourism businesses to be slashed to 5 percent in order to boost the rural economy post-Covid-19.

It comes as figures show tourism firms in the countryside will see revenues fall by up to £17.6 billion this year due to the virus outbreak.

The Country Land and Business Association (CLA) has suggested a drop in VAT from 20% down to 5% as a measure to soften the blow.

It highlighted that the UK’s rate is far higher than in other countries, including France (10%), Spain (10%) and Greece (13%).

The call comes as the group, which represents 30,000 rural businesses, released a raft of new suggestions to get the rural economy moving.

CLA President Mark Bridgeman said: “When the restrictions are lifted we are encouraging everyone to book their family holiday in the beauty and safety of the British landscape.

“We hope that people are looking forward to enjoying the tranquillity and space that the rural and coastal areas have to offer and enjoy.”

A reduction in VAT to levels seen in other countries would ensure that domestic tourism is competitive and affordable, he said.

And competitive pricing would significantly boost the economy and keep the UK’s carbon footprint down.

The CLA’s paper ‘COVID-19: Re-starting the economy in rural areas’ argues that rural areas have an advantage to social distancing thanks to lower population density, more space and less reliance on public transport.

Other proposals in the report include the tapering of furloughing schemes and other business support measures slowly to avoid a cliff edge.

The Centre for Rural Economy is a research centre at Newcastle University, which specialises in research that aims to achieve sustainable development in rural areas.

It has recently published a new briefing note, which considers the impact of the coronavirus outbreak on rural economies and communities.

The report’s summary states: ‘The disease is affecting all aspects of rural society, both directly when people from rural communities fall ill, but also because of the social-distancing restrictions that are in place to limit the progress of the disease.

 ‘It is impacting household incomes and rural businesses in every sector within our diverse rural economies, as well as charitable and community organisations. Some of these impacts will also be medium or long-term.’

It notes that past crises – such as the foot and mouth outbreak in 2001 and the most recent financial crisis and recession ‘have highlighted the resilience and adaptability of rural economies’.

It goes on: ‘Some of the structural features of rural areas, notably their more dispersed population base and their already established tradition of home-based working could well serve to act as a source of resilience during this crisis.

‘On the other hand, more severe restrictions placed in this crisis on personal travel for non-essential purposes may impact more heavily on rural areas, due to the greater dispersal of workplaces, consumer and business services, and the importance of visitor economies to many rural areas.’

The briefing notes sets out a range of recommendations for the Government, which includes the introduction of support measures for social and community enterprises active in rural areas, and to ‘put in motion plans for a medium term-package of measures to help reboot and build capacity among rural businesses, social enterprises and their networks’.

New analysis of household spending in Britain’s rural communities reveals a gap of more than £3300 a year spent on everyday essentials like petrol and groceries compared to those living in towns and cities – the equivalent of £15.8 billion each year across the UK.

The findings come from BoilerJuice Connected and show that the cost of living in the British countryside has been rising at 29 per cent more than the average national rate.

BoilerJuice Connected is a new service that enables heating oil customers to digitally monitor their heating oil usage and arrange top-ups.

The research identified the 20 everyday items that rural households are most dependent on and calculated an overall inflation rate for them using a similar methodology to that used to measure the official Consumer Price Index inflation rate.

Extra spending on key items for country dwellers was mainly due to the costs of transport, petrol and domestic fuels, each of which affect residents of rural communities more because they are typically more dependent on cars, drive further and are less likely to be on the power grid.